Office-to-residential conversions are being pushed as a solution to the affordable housing shortage. Can they deliver?
Cushman & Wakefield estimate more than 1.4bn square feet of office space in the US will be obsolete by 2030. Due to the rise of remote and hybrid work, many businesses have downsized or abandoned their offices, creating a surplus of vacant high-rises from coast to coast.
In cities such as San Francisco, Dallas, Chicago, and Atlanta, developers have repurposed or are planning to repurpose underutilized office space into much-needed housing units in prime downtown locations.
But office-to-residential conversions are not without challenges. In some cases, modern office buildings have floor plans that are difficult and costly to adapt to residential use, with obtrusive structural columns, communal plumbing, and windows that don’t open. As a result, some cities are considering legalizing windowless bedrooms. Critics argue that such rooms are unsafe and inhumane because they lack proper ventilation, natural light, and a fire escape.
The increasing popularity of office-to-residential conversions will have the most immediate impact on the multi-family market, but could also have an impact on single-family rentals. With more affordable housing available in urban areas, some renters who may have previously opted for single-family homes could choose to live in converted office buildings instead for their easier access to jobs, transportation, and other amenities.
However, because office-to-residential conversions are typically limited to densely populated urban areas, the demand for single-family homes may remain strong in suburban or rural areas.
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