RXR's Adam Greene outlined a mixed outlook for New York City real estate during Commercial Observer's Future of New York Forum, signaling that the city's property market faces divergent pressures across asset classes.
Greene, Executive Vice President of Development at RXR, emphasized office-to-residential conversions as a growing strategy for the city. Older office towers struggling with vacancy rates and remote work headwinds now attract developer interest for conversion into apartments and mixed-use developments. This reflects broader market reality: traditional office space faces structural demand challenges, but well-located buildings with desirable floor plates and views retain traction among institutional tenants seeking premium environments.
Simultaneously, Greene stressed that high-quality office space remains sought after. Modern, efficient office buildings with strong amenities and LEED certification continue to attract capital and tenants willing to pay top rates. The divergence matters for owners. Older Class B and C buildings face conversion pressure and value destruction. Class A trophy offices in prime submarkets like Midtown Manhattan and Hudson Yards command rents above $70 per square foot and maintain low vacancy.
AI and emerging technologies shape RXR's development strategy going forward. Greene highlighted how artificial intelligence influences workplace design, requiring flexible, tech-forward offices that accommodate hybrid work and next-gen company needs. This impacts construction costs, tenant fit-out requirements, and long-term lease structures.
For investors, the split market creates both opportunity and risk. RXR, a major Manhattan developer and owner, bets on conversions in secondary locations and high-quality office retention in prime markets. Buyers seeking value may find conversion deals attractive; those seeking stability should focus on A-class trophy assets. Landlords of aging office stock face pressure to adapt or convert. Tenants benefit from landlord flexibility on lease terms as supply softens, particularly outside trophy addresses.
The message from Greene reflects industry consensus