Midtown Manhattan building scare could raise costs for office conversions

Two buckled structural columns at 235 East 42nd Street, the former Pfizer headquarters in Midtown Manhattan, forced evacuations and street closures across Midtown East and exposed the risks hanging over one of New York’s biggest office-to-housing projects. City officials said the 37-story building remained unstable after workers discovered the damage around 8 a.m. on July 7, with cracks and sagging floors also found on the 21st floor.

The property is being converted from office space to apartments by Metro Loft and David Werner Real Estate Investments under active permits, part of a project that developers and architects have described as the largest office-to-residential conversion in New York City history and, in some coverage, the largest in the nation. Plans call for more than 1,600 apartments and more than 400 affordable units, making the building a flagship for a strategy many cities are leaning on to tackle both downtown vacancy and housing shortages.

That strategy is already expanding in New York. The Office of the New York City Comptroller said the city had 44 completed, ongoing and potential office-to-residential conversions as of the first quarter of 2025, totaling 15.2 million gross square feet. A key driver is 467-m, the 2024 tax incentive that supports office-to-rental conversions and requires 25% of apartments to be income-restricted at an average of 80% of area median income, with rent stabilization in perpetuity.

The incident could sharpen scrutiny of those deals. The site had seven construction safety violations in 2025 and more than $32,000 in fines, adding to concerns that large, complex conversions can carry construction and structural risk well beyond a typical renovation. In Midtown East, the emergency zone spread far enough to affect nearby sites including a school and the Israeli consulate, underscoring how quickly a conversion project can become a public-safety event.

Nathan Berman, Metro Loft’s founder, said the structural concerns were localized and fixable. Steamfitters Local 638 took the opposite view, accusing contractors of putting profit over safety. City crews responded with temporary shoring, braces, jacks and new steel to stabilize the building, but the scare is likely to feed tougher underwriting, more expensive insurance and closer regulatory review for office conversions far beyond Manhattan.