ITHACA, N.Y.—It’s fairly well known at this point that the office space rental market nationwide has taken a tumble due to COVID. Remote work reduced the need for space, and the market never quite recovered even as the pandemic receded.

That issue is compounded by the nature of Ithaca’s market. The local economy is dominated by “meds and eds,” leisure/hospitality, and boutique technology and research firms. These kinds of organizations either build their own office space (Cornell’s East Hill Office Building, Cayuga Med’s new building at Carpenter Park), or tend to be “asset light” and have small footprints.

Between national trends and having a lukewarm market to begin with, the local office market is hurting, with high vacancy rates. However, the local housing market remains quite strong. Stuck with property lemons, some landlords and developers seek to turn their assets into lemonade.

At least one local office space landlord has already submitted plans to convert a prominent Downtown corner into apartment space. Now a second local landlord/developer seeks to do the same just a couple blocks away to the east.

The second property now being considered for a residential conversion is the Gateway Center at 401 East State Street. Built as a trucking company’s warehouse in 1925, the five-story, 47,285 square-foot building was renovated into offices by developer Mack Travis in the early 2000s.

Plans detailed by Mack’s son and current company head Frost Travis call for conversion of the now-vacant office floors into 46 market-rate apartment units, the “Gateway Lofts.” The ground floor would still offer commercial retail space for two restaurant tenants and a fitness center. It would also include a `1,800 square-foot community room to be leased at below-market rates to senior services non-profit Lifelong and Alpha Phi Alpha fraternity (the nation’s first black fraternity, which will have its birthplace monument next door), and available to the general Ithaca community at standard room rental rates.

The upper floors are fairly routine as conversions go; floors 2-5 host the apartments, the fifth floor will have a community room for tenants, and their will be a rooftop garden terrace and outdoor seating area. The units will be all-electric and comply with the Ithaca Green Building Policy. STREAM Collaborative is the architect and Taitem Engineering is providing the engineering work, while Purcell Construction would be the general contractor in charge of build-out.

Being in the city’s density zone for tax incentives, the project is applying to the Tompkins County Industrial Development Agency for a standard seven-year graduated tax abatement under Ithaca’s CIITAP program, as well as the standard mortgage tax and sales tax on construction materials exemptions that are typically requested on economic development projects.

As stated in the IDA application, the mortgage tax exemption is worth $33,672, the sales tax exemption is worth $491,244, and the tax abatement is worth $1,120,007. The total requested incentive package of $1,734,923 is about 8.9% of the total cost of the $19.6 million project. In return, Travis’s firm offers to pay $230,000 into the community affordable housing fund, create about 100 construction jobs during the renovation, and generate $1.19 million in new property taxes over the current assessment, even with the abatement in place. Given the different market dynamics and the premiums for new space, the apartments would be worth more than office space per square foot.

One thing that needs to be pointed out from a regulatory standpoint is that only limited, staff-level Site Plan Review is required from the city of Ithaca. Apartments are an allowed used in Central Business District zoning, and exterior changes are minimal. It’s just a switch of interior space from one permitted use to another, so it doesn’t need to go through full Planning Board review to obtain construction permits. The developer’s goal is to start this fall and have the apartments ready in Summer 2023.

The project will commence discussion before the IDA’s board at their meeting at 2:30 p.m. on Wednesday October 12th, and livestreamed here. Side note, review of major IDA applications like this one always takes at least one month before decisions are made, so you do have time to compose your thoughts, spoken or written. Written comments can be sent to IAED’s Ina Arthur at

Brian Crandall

Brian Crandall reports on housing and development for the Ithaca Voice. He can be reached at