| Factor |
Conversion |
Demolition + New Construction |
| Typical timeline |
Faster — often 18–36 months depending on scope and DOB processing |
Slower — typically 3–5+ years including demolition, foundation, full construction |
| Hard cost per SF |
Lower than new construction in many cases — existing structure is retained |
Higher — full foundation, structure, facade, and systems from scratch |
| Soft cost surprises |
Higher relative risk — unknown conditions inside walls; asbestos, code compliance upgrades |
More predictable — blank slate with fewer hidden variables |
| Zoning flexibility |
Limited by existing structure and footprint; cannot always maximize FAR |
Full flexibility to design to maximum FAR and optimize unit mix |
| Incentives available |
467-m abatement; potential historic tax credits; Opportunity Zone (if applicable) |
485-x for new rental construction; standard as-of-right or UAP bonus path |
| When it makes sense |
When the existing structure is sound, floor plates work, and incentives are available |
When the site is underbuilt, the existing structure is poor, or maximum FAR is the goal |
| Environmental risk |
Asbestos, lead paint, and PCBs are common in older buildings; abatement adds cost |
Site remediation risk at ground level; no legacy materials in the structure itself |
| Financing approach |
Construction loan sized to conversion cost; lenders scrutinize physical condition heavily |
Standard construction loan; lenders use pre-development underwriting |
Bottom line: Conversion wins on timeline and cost when the building's physical attributes align with residential use — particularly floor plate depth and core placement. New construction wins when maximum FAR is achievable and the existing structure is too constrained. The decision always starts with the building's bones.
