Challenges and Opportunities for Hotel-to-Housing Conversions in NYC

Noah Kazis, University of Michigan Law School
Elisabeth Appel, New York University
Matt Murphy, New York University Furman Center

Reproduced with permission.


As the country continues to grapple with the COVID-19 crisis and its aftermath, policymakers in New York City and Albany have debated how to support the conversion of hotels into housing—and especially affordable housing—as part of a solution to the city’s ongoing housing crisis. The basic intuition is compelling. COVID has forced the shuttering of many commercial establishments, especially in hard-hit New York City. In certain sectors, the effect has been particularly large: these include hotels devastated by shutdowns in tourism, international travel, and business travel. At the same time as these spaces are sitting empty, though, Americans have faced unprecedented challenges in paying their rent—on top of preexisting rent burdens that had been driving housing instability and homelessness well before COVID. It is logical to want to use these spaces—these important physical assets—rather than let them remain unoccupied, and housing is an attractive use. However, not all hotels are ripe for conversion to housing, and the scope of the opportunity presented by hotel conversions is not clear. Some hotels—because of their business model, location, or design—are better candidates for conversion than others, and for conversion to different types of housing. In one case, only minimal and economical renovations might be required; in another, expensive gut rehabilitation would be necessary to turn the hotel into a residential use. To better understand what opportunities for hotel conversion exist in New York City, we examined the legal regime governing hotel conversions to identify the most important regulatory barriers to such adaptive uses. We also compiled data examining how the hotel market is segmented—how many hotel rooms, of what kind, are located where—in order to further understand how different conversion strategies might play out spatially.