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If there is a collapse in the market for office real estate, given the shortage of housing in various US markets, I would not be sad if some of these large offi

If there is a collapse in the market for office real estate, given the shortage of housing in various US markets, I would not be sad if some of these large office buildings were converted to mixed residential & commercial use. Yeah, being able to live in the same building as where you work and just take elevator or stairs to your employer's office would be an expensive luxury option that probably only upper-middle and upper classes could afford. But, it would take some pressure off less fancy housing options like regular apartments, duplexes, and single-family houses. It wouldn't address the problem of investment corps snatching up any and all residential real-estate they can in the face of other fiscal policies. But, when in your local market, a 1500 sq ft 1960s construction house with little-to-no insulation, yard filled with sun-scorched weeds, and in need of 10s of thousands of dollars repairs to the building envelope goes for half a million dollars cash sight unseen in less than a week after it goes on the market, any policy change that improves the supply and demand equilibrium helps those who just want to live in the available housing supply.

failwhaleshark 5y ago
This would be very expensive since commercial office buildings and residential units are vastly different in terms of construction, building codes, utilities, and layouts. Sure, you could chop them up into artist studios and lofts, but they would be extremely expensive.
- majormajor 5y ago
  Even if you have to tear down and rebuild, rezoning and conversion here seems much more politically achievable than up-zoning existing residential areas. On the one hand, you have to fight current residents who would be displaced, as well as their neighbors who don't like change. On the other hand, you have the ability to make the land valuable still by repurposing it for residential instead of having an empty wasted tower.
  - failwhaleshark 5y ago
    I guess it's an opportunity cost calculation of convert vs. rebuild. Some affluent areas where the inventory of fancy lofts is low would likely support it, while lower-income areas it would be best to demo and build a giant tower of micro apartments.
- nathantotten 5y ago
  I think if somebody gets creative about it some of that cost can be reduced. Likely the big drivers in cost are going to be running utilities to support different uses (kitchens, showers, etc.) Maybe a new type of living space can exist where kitchens are shared? Or where there is a gym with private spa-like shower/changing space on a lower floor. I'm not saying these are good ideas (I certainly wouldn't live in that sort of place now), but maybe somebody can figure it out.
- korethr 5y ago
  Oh absolutely. The collapse in the market for office real-estate would have to get particularly bad for the owners of those properties go for that option. The owners of these properties are in the business to make money. If nobody wants their property for offices anymore, they will have to find some new use for their property that they can profit from. The condos/studios/lofts/whatever resulting from a conversion would indeed need to command high rates to make such a conversion worth it. Like I said, the housing created by such an option would be an expensive luxury probably only affordable by the upper-middle and upper classes. However, given the (IMO probable) positive effects for less-than-rich, I would not protest such an outcome.
  - mrobins 5y ago
    I can’t speak to the conversion costs, but let’s pretend there’s a creative solution (modular construction?). Converting office space to mass market housing could be a huge long term win. Cities like NYC and SF already have a huge shortage of overall non-luxury units which has caused rents in previously less expensive further out neighborhoods to spike. These neighborhoods aren’t super exciting to live in now so they’ll naturally be more affordable to start. Hopefully over time by mixing housing and residential in these central business districts they’ll become more vibrant w/ an economic engine that runs on nights/weekends too. If commercial vacancies really do spike it may be better for cities to incentivize these conversions rather then let their midtown’s stagnate.
bearjaws 5y ago
I doubt anyone with upperclass wealth will consider moving into a retrofitted office building. The quality of the housing will not be equal to a modern tower. Even running water and waste water will be very problematic. The complete lack of amenities of modern towers built for housing, gym, pool, recreation center, balconies... Depending on location parking could basically be impossible or they have to convert limited office parking into resident parking. IMO we are more likely to see these become "luxury apartments", which means the expense of luxury minus the actual luxury.
swagtricker 5y ago
I highly doubt that could be done profitably. The water infrastructure support alone (increased water usage for showering, laundry, dishwashers) might kill it when you consider the sparse "office" kitchenette on every other floor and centralized shared restrooms (without showers) as they're currently designed. Then of course there's HVAC controls, external/internal wall insulation concerns, noise reduction issues, additional wear & tear on elevators through significantly higher usage... You get the idea.
uncertainrhymes 5y ago
I lived in an ancient finance building that was converted to residential in the 80s. All the layouts were bizarre, twisting around to give every unit the barest slice of window. The bike storage in the basement was a vault with a 24" thick door that was just left there because it would have been impossible to move. Converting a modern building would be very expensive. Converting a hotel on the other hand -- perfect. They already have plumbing and fire separation. An open plan office is just a shell.
iancmceachern 5y ago
Our building in SF is doing this. All the units are "live work" and previous to the pandemic many were rented out as offices. Now most have been changed over to residential.
telesilla 5y ago
This already started happening in some European cities such as Amsterdam. Other places are seeing a huge number of small office locales for sale, such as those you might have seen accountants or lawyers.

failwhaleshark 5y ago

This would be very expensive since commercial office buildings and residential units are vastly different in terms of construction, building codes, utilities, and layouts. Sure, you could chop them up into artist studios and lofts, but they would be extremely expensive.

majormajor 5y ago
Even if you have to tear down and rebuild, rezoning and conversion here seems much more politically achievable than up-zoning existing residential areas. On the one hand, you have to fight current residents who would be displaced, as well as their neighbors who don't like change. On the other hand, you have the ability to make the land valuable still by repurposing it for residential instead of having an empty wasted tower.
- failwhaleshark 5y ago
  I guess it's an opportunity cost calculation of convert vs. rebuild. Some affluent areas where the inventory of fancy lofts is low would likely support it, while lower-income areas it would be best to demo and build a giant tower of micro apartments.
nathantotten 5y ago
I think if somebody gets creative about it some of that cost can be reduced. Likely the big drivers in cost are going to be running utilities to support different uses (kitchens, showers, etc.) Maybe a new type of living space can exist where kitchens are shared? Or where there is a gym with private spa-like shower/changing space on a lower floor. I'm not saying these are good ideas (I certainly wouldn't live in that sort of place now), but maybe somebody can figure it out.
korethr 5y ago
Oh absolutely. The collapse in the market for office real-estate would have to get particularly bad for the owners of those properties go for that option. The owners of these properties are in the business to make money. If nobody wants their property for offices anymore, they will have to find some new use for their property that they can profit from. The condos/studios/lofts/whatever resulting from a conversion would indeed need to command high rates to make such a conversion worth it. Like I said, the housing created by such an option would be an expensive luxury probably only affordable by the upper-middle and upper classes. However, given the (IMO probable) positive effects for less-than-rich, I would not protest such an outcome.
- mrobins 5y ago
  I can’t speak to the conversion costs, but let’s pretend there’s a creative solution (modular construction?). Converting office space to mass market housing could be a huge long term win. Cities like NYC and SF already have a huge shortage of overall non-luxury units which has caused rents in previously less expensive further out neighborhoods to spike. These neighborhoods aren’t super exciting to live in now so they’ll naturally be more affordable to start. Hopefully over time by mixing housing and residential in these central business districts they’ll become more vibrant w/ an economic engine that runs on nights/weekends too. If commercial vacancies really do spike it may be better for cities to incentivize these conversions rather then let their midtown’s stagnate.

bearjaws 5y ago

I doubt anyone with upperclass wealth will consider moving into a retrofitted office building. The quality of the housing will not be equal to a modern tower. Even running water and waste water will be very problematic. The complete lack of amenities of modern towers built for housing, gym, pool, recreation center, balconies... Depending on location parking could basically be impossible or they have to convert limited office parking into resident parking. IMO we are more likely to see these become "luxury apartments", which means the expense of luxury minus the actual luxury.

swagtricker 5y ago

I highly doubt that could be done profitably. The water infrastructure support alone (increased water usage for showering, laundry, dishwashers) might kill it when you consider the sparse "office" kitchenette on every other floor and centralized shared restrooms (without showers) as they're currently designed. Then of course there's HVAC controls, external/internal wall insulation concerns, noise reduction issues, additional wear & tear on elevators through significantly higher usage... You get the idea.

uncertainrhymes 5y ago

I lived in an ancient finance building that was converted to residential in the 80s. All the layouts were bizarre, twisting around to give every unit the barest slice of window. The bike storage in the basement was a vault with a 24" thick door that was just left there because it would have been impossible to move. Converting a modern building would be very expensive. Converting a hotel on the other hand -- perfect. They already have plumbing and fire separation. An open plan office is just a shell.

iancmceachern 5y ago

Our building in SF is doing this. All the units are "live work" and previous to the pandemic many were rented out as offices. Now most have been changed over to residential.

telesilla 5y ago

This already started happening in some European cities such as Amsterdam. Other places are seeing a huge number of small office locales for sale, such as those you might have seen accountants or lawyers.