Maximizing Underused Hospital-Owned Land for Affordable Housing

March 7th 2024 | Matthew Murphy, Tony Bodulovic

As New York City faces its worst housing crisis in over 50 years, policymakers are looking to connect affordable housing developers with a range of institutional stakeholders from hospitals to faith-based organizations to find ways to increase the supply of homes. 

To assist city and state policymakers, planners, housing developers, community development organizations, and other stakeholders, the NYU Furman Center released an interactive map analyzing healthcare facility and hospital-owned (HHO) properties and their suitability for housing development as part of our March 7 conference with the Federal Reserve Bank of New York: Fostering Neighborhoods: Hospitals and the Development of Affordable Housing.

To understand the landscape of HHO properties, the Furman Center analyzed properties using tax exemption data from the New York City Department of Finance (DOF) and other data on buildings and zoning from the Department of Buildings (DOB) and the Department of City Planning (DCP) to locate properties that have both unused lot space and unused floor area relative to the size of the land parcel. We also explored which zoning districts contain the most properties and which community districts have the greatest development potential. 

Our analysis shows that HHO properties across the five boroughs make up 44 million square feet of land – the equivalent of approximately 7 percent of Manhattan’s land mass.

Interactive Map of Hospital-Owned Properities in New York City

Users can explore detailed information on New York City’s health- and hospital-owned land, including filterable criteria on zoning and lot size that might help identify potential development opportunities. The map will also help users to gain an understanding of the spatial concentrations of this land type based on certain criteria.

The majority – or 85 percent – of unused Floor Area Ratio is located in high-density residential zones, like the east side of Manhattan. Half of all the unused Floor Area Ratio – a measure of allowed density under current zoning – is in Manhattan. To put that figure into context, the unused Floor Area Ratio is roughly the equivalent of 5 percent of Manhattan’s office space, which could be leveraged to find ways to facilitate conversion to housing.

Our analysis also showed that across health- and hospital-owned properties, 25 million square feet of zoned Floor Area Ratio is not currently used. This roughly equates to the development of between 25,000 to 30,000 residential units, assuming that about 80 percent of the unused Floor Area Ratio becomes residential, and that the average apartment is about 750 square feet. 

In Manhattan, healthcare facilities and hospital-owned properties are concentrated in neighborhoods like the Upper East Side, Washington Heights, and Inwood. However, our analysis showed that there are also pockets of opportunity in outer borough neighborhoods like Kingsbridge Heights, Flushing, and Borough Park.

While the status of underutilized HHO land varies across the city, potential development sites may include currently vacant land, parking lots, or parcels with underdeveloped structures. Project sizes may range from adding “gentle density” on smaller lots to major unit production in key corridors next to large health facilities, or integrated onto large campus style developments. 

But even while the total potential opportunity to build up to almost 30,000 new homes is an attractive proposition, there are a number of considerations that impact what’s realistic. For example, healthcare facility managers will need to carefully weigh the demands of healthcare facilities over time. Some organizations will need to physically expand in order to fulfill their mission, so will need to weigh that against building something today. Healthcare facility managers also need to balance the immediate community needs with both long-term and phased redevelopment. Alongside that, strict regulation of hospitals and the use of hospital beds will make planning for phased redevelopment tricky. 

Other factors will also play a role, such as ensuring the parking needs of patients, hospital staff, vendors, and others are met, especially for healthcare facilities that are not located in transit rich areas. As with any development in New York City, irregular lots may prevent new development. Another consideration is zoning - both the zoning of the site, and the surrounding neighborhood’s zoning. In some cases, the current zoning will be too outdated to serve the anticipated needs of healthcare facilities, requiring zoning to be changed. But changing zoning in New York City is a complicated, expensive, and political process. One of the many considerations of such an effort is how new buildings fit contextually in a neighborhood, and owners might need to figure out ways to gently increase residential density where that is a stricter consideration. In the case of healthcare facilities that are located in dense areas, determining whether to pursue demolition and redevelopment, versus seeking to transfer development rights to nearby properties will be another complicated consideration. Finally, sustainability is a major consideration. Healthcare facilities will need to work to reduce carbon emissions in order to comply with Local Law 97 requirements and carefully plan how to do so in the context of their portfolios.

Another obvious consideration is the cost of building new housing, especially affordable housing, and the limited government subsidies that are available to finance construction at affordable rents. Supply-side government subsidies, such as low interest financing and Low-Income Housing Tax Credit (LIHTC) equity are limited and oversubscribed, with State and City officials maximizing use of federal resources but still needing to complement them with local financing. Tenant-based subsidies, such as Housing Choice Vouchers, which cover a portion of rent in order to eliminate rent burden for a HCV user are also limited, with far more demand for such assistance than what is available. This in turn has led to important conversations about whether and how to use various healthcare funding tools to support housing development or tenant-based subsidies. 

Mayor Eric Adams’ City of Yes for Housing Opportunity proposal acknowledges that many campuses across the city have underused space that could be used to create housing. His proposal aims at making development easier by removing obstacles and streamlining outdated rules that could well-position health-and hospital systems to provide much needed land for affordable housing.

With an extremely low 1.4 percent rental vacancy rate in the city, stakeholders recognize that the city needs both short- and long-term affordable housing options that incorporate social support for the most vulnerable populations in New York City. Health and hospital systems could represent a significant and impactful opportunity for development partnerships.

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