4 ms·

Commercial is not easily reusable for residential, the requirements are totally different.

shaburn 4y ago
- bobthepanda 4y ago
  It's not even about the law, we just don't put kitchens or showers in commercial buildings, and retrofitting them in would be extremely impractical. It's not impractical to tear down a house and put down a perfectly building code compliant apartment building.
- shaburn 4y ago
  Would love to see this argument quantified.
  - tptacek 4y ago
    No, you wouldn't; it's been quantified for you on this thread, and you ignored it.
    - deleted 4y ago
      [deleted]
    - shaburn 4y ago
      Noted and refuted.
bradleybuda 4y ago
FWIW, this is also an own-goal caused by dumb zoning policies. Regardless, the point that "we need to legalize the construction of residences to bring down prices" stands.
- bobthepanda 4y ago
  Residents want self contained units with kitchens, bathrooms and probably laundry. Offices want large, flexible open-floor plans with the only plumbing being floor-wide mega-bathrooms. The two just aren’t compatible.
  - harambae 4y ago
    I live in a condo complex that used to be a high school. We all have electric heating and cooking, because there wasn't gas connections (which is annoying, but tolerable). We all have 14 to 16 foot ceilings (which is actually kind nice). The bathrooms were all somehow renovated and some plumbing rerouted. We have shared laundry downstairs (which sucks, but not as much as living in a tent city). Someday there should be an actual HN article by an expert breaking down what's involved to renovate an office into apartments. It's clearly not impossible.
    - bobthepanda 4y ago
      Nothing is impossible given enough money. But on the whole, it is much easier to convert hotels, motels, and I suppose high schools given that they are already subdivided into rooms of a decent size and each room has natural light. The issue with commercial offices is that the buildings have gotten larger and larger, but residential building depth will max out at around 45 feet, leaving a massive unusable interior.
shaburn 4y ago
This all screams building shortage to...? "Downtown Oakland’s vacancy reaches 32%" https://therealdeal.com/sanfrancisco/2022/07/27/downtown-oaklands-vacancy-reaches-32-percent/ https://therealdeal.com/sanfrancisco/2022/07/27/downtown-oak...
- tptacek 4y ago
  That's CRE vacancy. $300k will barely get you a condo in Oakland; $200k won't, it'll only get you random patches of dirt. CRE vacancies are unsurprising. You may not have noticed, but we just had a huge multi-year pandemic that moved huge amounts of work out of offices and into homes.
  - deleted 4y ago
    [deleted]
shaburn 4y ago
"Not easily reusable" What does this even mean? Will settle for even a rough rounded up ballpark conversion cost that we can break down on a square foot basis.
- bobthepanda 4y ago
  Here’s an analysis from Moody’s: > The cost to convert offices to an average apartment building is about $100-$200/SF[4], although that cost could be significantly inflated now. If we assume $150/SF of hard and soft costs plus a 15% profit margin of $23/SF, a developer will need to seek offices available at $262/SF. Exhibit 1 below shows that the median New York office transaction price was $542/SF in 2021, with about 20% traded at $262/SF or lower. > First, we looked at office rent per SF. The median apartment asking rent is $55/SF in NYC[5]. As Exhibit 2 shows, about 36% of NY office properties fall below or meet the median apartment rent per SF. A developer would likely seek offices with rents much lower than $55/SF because of the amortized cost of conversion, but again this is a rough exercise to broadly understand potential scale of the conversion trend. We also considered vacancy rate. Typically, developers would seek prospective office building conversions with above average vacancy, both because it’s easier to buy out or relocate fewer office tenants and high vacancy may reinforce that office space isn’t the highest and best use of a property. Of the 1,066 tracked NYC office properties, only 12% met our vacancy rate threshold of 30% or higher. When apply the two limits of $55/SF rent and 30% or higher vacancy rates, only 0.7% of Class A buildings and 6% of Class B/C buildings make the conversion reasonable. > The size and shape of typical office buildings also limits potential conversions. Office buildings typically include deep floor plates and limited natural light for interior offices and storage rooms. However, natural light throughout is essential for dwellings, so apartment depths tend to max out around 40-50 ft. Much of the office building may be rendered unusable (or of very low value) with deep floor plates beyond 100-120 feet wide, after accounting for elevator and mechanical cores. > An office building with a floor plate of less than 14,000 SF may be a good candidate for conversion, depending on the building shape. In the worst case the building is square (where both sides are equally as deep), the floor plate will be roughly 120 ft by 120 ft, resulting in just about the absolute maximum depth of 50 ft of apartment on one side and 50 ft on the other, with at least 20ft of elevator core and mechanical between. Of course, there may be other orientations of buildings (and creative solutions of designers and developers) that either allow or preclude profitable conversion, and that can even vary up and down a building’s stacking plan. But once again, this is a “rough justice” analysis. Without detailed information on all NYC offices’ floor size and shape up and down the buildings, we assume a convertible building to have an average square floor plate size of 14,000 SF. Layering in the 14,000 SF floor plate threshold on top of our vacancy rate and asking rents limits, only about 3%, or 35, of NYC office properties would be convertible via our (crude but reasonable) methodology. 35 converted office buildings is hardly a dent in housing demand for all of NYC. https://cre.moodysanalytics.com/insights/cre-trends/office-to-apartment-conversions/ https://cre.moodysanalytics.com/insights/cre-trends/office-t...

bobthepanda 4y ago
It's not even about the law, we just don't put kitchens or showers in commercial buildings, and retrofitting them in would be extremely impractical. It's not impractical to tear down a house and put down a perfectly building code compliant apartment building.
shaburn 4y ago
Would love to see this argument quantified.
- tptacek 4y ago
  No, you wouldn't; it's been quantified for you on this thread, and you ignored it.
  - deleted 4y ago
    [deleted]
  - shaburn 4y ago
    Noted and refuted.

FWIW, this is also an own-goal caused by dumb zoning policies. Regardless, the point that "we need to legalize the construction of residences to bring down prices" stands.

bobthepanda 4y ago
Residents want self contained units with kitchens, bathrooms and probably laundry. Offices want large, flexible open-floor plans with the only plumbing being floor-wide mega-bathrooms. The two just aren’t compatible.
- harambae 4y ago
  I live in a condo complex that used to be a high school. We all have electric heating and cooking, because there wasn't gas connections (which is annoying, but tolerable). We all have 14 to 16 foot ceilings (which is actually kind nice). The bathrooms were all somehow renovated and some plumbing rerouted. We have shared laundry downstairs (which sucks, but not as much as living in a tent city). Someday there should be an actual HN article by an expert breaking down what's involved to renovate an office into apartments. It's clearly not impossible.
  - bobthepanda 4y ago
    Nothing is impossible given enough money. But on the whole, it is much easier to convert hotels, motels, and I suppose high schools given that they are already subdivided into rooms of a decent size and each room has natural light. The issue with commercial offices is that the buildings have gotten larger and larger, but residential building depth will max out at around 45 feet, leaving a massive unusable interior.

shaburn 4y ago

This all screams building shortage to...? "Downtown Oakland’s vacancy reaches 32%" https://therealdeal.com/sanfrancisco/2022/07/27/downtown-oaklands-vacancy-reaches-32-percent/ https://therealdeal.com/sanfrancisco/2022/07/27/downtown-oak...

tptacek 4y ago
That's CRE vacancy. $300k will barely get you a condo in Oakland; $200k won't, it'll only get you random patches of dirt. CRE vacancies are unsurprising. You may not have noticed, but we just had a huge multi-year pandemic that moved huge amounts of work out of offices and into homes.
- deleted 4y ago
  [deleted]

shaburn 4y ago

"Not easily reusable" What does this even mean? Will settle for even a rough rounded up ballpark conversion cost that we can break down on a square foot basis.

bobthepanda 4y ago
Here’s an analysis from Moody’s: > The cost to convert offices to an average apartment building is about $100-$200/SF[4], although that cost could be significantly inflated now. If we assume $150/SF of hard and soft costs plus a 15% profit margin of $23/SF, a developer will need to seek offices available at $262/SF. Exhibit 1 below shows that the median New York office transaction price was $542/SF in 2021, with about 20% traded at $262/SF or lower. > First, we looked at office rent per SF. The median apartment asking rent is $55/SF in NYC[5]. As Exhibit 2 shows, about 36% of NY office properties fall below or meet the median apartment rent per SF. A developer would likely seek offices with rents much lower than $55/SF because of the amortized cost of conversion, but again this is a rough exercise to broadly understand potential scale of the conversion trend. We also considered vacancy rate. Typically, developers would seek prospective office building conversions with above average vacancy, both because it’s easier to buy out or relocate fewer office tenants and high vacancy may reinforce that office space isn’t the highest and best use of a property. Of the 1,066 tracked NYC office properties, only 12% met our vacancy rate threshold of 30% or higher. When apply the two limits of $55/SF rent and 30% or higher vacancy rates, only 0.7% of Class A buildings and 6% of Class B/C buildings make the conversion reasonable. > The size and shape of typical office buildings also limits potential conversions. Office buildings typically include deep floor plates and limited natural light for interior offices and storage rooms. However, natural light throughout is essential for dwellings, so apartment depths tend to max out around 40-50 ft. Much of the office building may be rendered unusable (or of very low value) with deep floor plates beyond 100-120 feet wide, after accounting for elevator and mechanical cores. > An office building with a floor plate of less than 14,000 SF may be a good candidate for conversion, depending on the building shape. In the worst case the building is square (where both sides are equally as deep), the floor plate will be roughly 120 ft by 120 ft, resulting in just about the absolute maximum depth of 50 ft of apartment on one side and 50 ft on the other, with at least 20ft of elevator core and mechanical between. Of course, there may be other orientations of buildings (and creative solutions of designers and developers) that either allow or preclude profitable conversion, and that can even vary up and down a building’s stacking plan. But once again, this is a “rough justice” analysis. Without detailed information on all NYC offices’ floor size and shape up and down the buildings, we assume a convertible building to have an average square floor plate size of 14,000 SF. Layering in the 14,000 SF floor plate threshold on top of our vacancy rate and asking rents limits, only about 3%, or 35, of NYC office properties would be convertible via our (crude but reasonable) methodology. 35 converted office buildings is hardly a dent in housing demand for all of NYC. https://cre.moodysanalytics.com/insights/cre-trends/office-to-apartment-conversions/ https://cre.moodysanalytics.com/insights/cre-trends/office-t...