Conversion of office property to residential also requires a lot of capital which seems forgotten by a lot of the folks championing this kind of conversion. It's not as simple as building some interior walls and calling it a day
Ive been told in a lot if cases this is virtually impossible due to cost and structural constraints of office construction vs residential... notably ceiling heights, plumbing and floor plans are poorly designed for residential conversion.
Office space is very expensive to convert to residential, you have large rectangle with windows on the perimeter only, weird elevator/stair layout, insufficient plumbing for many individual bathrooms, and poor ventilation for kitchens.
The idea, and economics, of converting office space to housing is fascinating to me. Once you think about it for more than a moment you realize there are some major difficulties. A modern office high rise, for example, may have windows only on the outer edge of a vast floor plan. There may be one or two large bathrooms per floor, with no plumbing or even walls to contain plumbing anywhere else. The HVAC may be zoned per-floor. Gas and electric is not metered separately.
So depending on the building it could be a huge cost to turn into livable residences, much less desirable ones that would offset the expense.
Not to say it can’t be done but it seems really hard.
You can't just convert office space into residential space. Completely different building codes. Just the retrofit for the plumbing makes it untenable.
They're also difficult because modern office buildings just don't lend themselves to small apartments very well. One of the conversions in New York cut a giant hole through the middle of the building so they could have interior units that get light. Giant modern office buildings take a ton of effort to convert.
Large office towers just do not convert to residential very well. It can be done, it can be tolerated, it's just not a very good or competitive product, while also being very expensive to implement. One example, People walk a few blocks from the parking garage to their place of employment, but in most cities, people will not walk a few blocks from the parking garage to their home.
Adding insult to injury, office towers that have been constructed in the last 50 years are very expensive to maintain, mechanical systems are expensive and complicated, requires a full-time staff to run. They were built for utilization at very different price point.
I think it is more difficult to impossible to make office to residential units conversions that fit a $/sqft that’s meets the market for normal housing (avoid huge square footage for cheap).
All of these buildings have a hub, bathrooms, and open ceilings for laying more pipes/wiring next to all the fiber cables.
What makes conversion of office towers to housing not viable? It's easy for me to imagine a lot of objections to converting one building, but hard to imagine insurmountable difficulties in converting 1000, where you can amortize R&D and specialized equipment across a huge number of properties.
So, if you don't mind humoring me, can you sketch the worst / most expensive / most technically difficult requirements for converting an office tower to apartments? I suspect you're probably right, given you've got domain knowledge and I don't, it just feels like one of those problems that becomes more tractable at scale.
Most office buildings are not architecturally feasible to convert to residential. In fact, because of zoning laws, many/most can't even be converted.
Would you live in an apartment 15 feet wide and 50 feet deep? No. That's why most office buildings dont work
You have to redo all the mechanical, plumbing, electric, and then entirely refinish the building. Its literally cheaper to build new than deal with the nightmare that is to convert an office.
I work in CRE - every single office to multi deal i have seen the developer has war stories. And the units are 40-100% more expensive in cost than other apartments.
Office buildings are like an infectious disease. You could let them die. But if you have an urban infill city environment and more and more office properties become ghost buildings, then that disease will spread. All of the restaurants and other businesses nearby that rely on the foot traffic from office folk, they will die. You will see more riff raff. More homeless. More crime.
Many office assets need to go to 0 in asset value before the private market is willing to take the risk of those conversions.
Remember, loans are close to 10% for construction. And equity returns are higher.
> if it's a long term trend then more of it will convert to be residential
Converting an office building to residential use isn't easy. For example, you'd have to add water/sewage lines running to each residential unit.
Also, in NYC, apartments are required to have a certain number of windows. In a large office building, there can be a lot of floor space that's far from any windows.
My impression is that modern office buildings are basically stacks of exhibition halls. You can repurpose them easily and build the infrastructure you need. The biggest obstacle to converting them to residential is not plumbing or elevators but the lack of windows near the core.
Of course, it's not the modern centrally located office buildings that are vacant but the older ones at more remote locations. Converting those is going to be more expensive, and it may be more cost-effective to simply demolish them and build new residential.
Converting a high rise office building to residential is possible but expensive. Usually you have to gut the interior and completely rebuild. Water, sewer, and gas may need to be reconfigured and upgraded.
It's hard to transform many office buildings into residential spaces, unless you demolish them and rebuild.
Office buildings usually have huge floorplans while residential places require windows, so any space within ~5-6meters from the wall is basically useless (bathrooms, elevator shafts, storage spacce, stairways and not much else can be positioned there)
There have been many articles in the last few months about conversions. The regulations make it extremely expensive to turn in office into a home. There was an article last fall where someone backed out of doing that for a tower in San Francisco because in addition to the standard regulations there was also requirement that some of the units be set aside for low rent and that made the conversion economically unfeasible even for the biggest optimist
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