There is ALOT you are missing and assuming with your assessment here.

First off is you are assuming there is no cash flow at all for these office spaces. There is and return to office continues to tick up. If it keeps going and if there is an event like a white collar recession employees will be more willing to go in and will have less bargaining power.

The second is you are assuming it would be more profitable to go residential. There are huge construction costs to make this transition, plus downtime where the building is empty and design costs. Residential is also less money per sf by ALOT.

The last and most important point is the value of commercial space versus residential. If you convert a building not only do you lose SF to get legal light and air plus egress for each unit, you lose huge value on the sf you do keep. This drops the value of your overall portfolio which you use to gain credit and borrow with (to the tune of tens of millions). These buildings are not all about cash flow for owners. They are giant stores of wealth for credit and borrowing.

I’m super on board with the idea of the conversions, but I’m curious how do you think they could handle the “everyone but me” mentality? Afaik it’s not like we have 60% of office buildings completely full and 40% completely empty. So if you own an office building and you hear that all the government is trying to get all the offices near you to close down, then by saying “okay everyone but me should close down, I’m going to stay open” you can usurp all their business.

Of course, it becomes highly irrational when everyone has this mentality, but it’s the same reason that people speed in traffic and cause more traffic. If everyone agrees, then everything’s great. But if everyone agrees, then the best strategy for me specifically is to not agree. But then this is true for everyone, so in reality no one (or a lot of people) decline.

We're currently seeing carrot-and-stick attempts by office tenants to compel their employees back into the office. Office occupancy was at about 47% at the end of 2022, and probably won't go above 60%. What we will likely see is re-negotiated leases to the benefit of commercial tenants. We might see some of that space converted to other uses - yoga studios, medical offices, classrooms, etc.

There's a bunch of reasons why office landlords won't want their offices converted to residential. First, the cost of converting them into a dorm-like situation would offset the benefits. Second, their lenders might bring a lawsuit against them depending on what their mortgage says. Third, there's a bajillion liability issues that comes with it, in particular ensuring the physical safety of tenants (I can't imagine many single women would feel safe living like that). Fourth, there's a far greater likelihood of damage being done to the building if it's used for residential purposes. Fifth, existing commercial tenants won't like sharing the building with residents living in what are effectively dorms.

As I mentioned in another comment, trying to compel office landlords to convert will be an expensive and time consuming process. I think that that energy and cost is better served in an aggressive re-zoning effort, which is one of the major impediments to building affordable housing in the City.

I'm not arguing that housing is a mandatory right, but the plan simply isn't feasible because of (1) physical issues (i.e. how the building is built - and don't even get me started on the personal safety problems that this would cause) and (2) legal issues. If the private sector doesn't want to cooperate, then providing housing at all is far more difficult. The City doesn't build housing, but provides incentives for private companies to do it.

The State allowed a tax bill that provided a temporary tax abatement (not tax forgiveness, but abatement) expire without a replacement in 2022. That will further compound the crisis.