5 ms·

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 a

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.

brookst 4y ago
> It can be done, it can be tolerated, it's just not a very good or competitive product I agree with everything you said, just want to highlight that this quote is the classic statement of a business opportunity. There is a VC pitch here: a company that acquired distressed office space at scale, from panicked sellers, and with the expertise to do these conversions in a systematic, cost-optimized way. Banks are going to want to unload these properties as soon as they appear, for dirt cheap. Someone is going to make a lot of money by approaching the issue as a tech problem.
- ethagknight 4y ago
  I work in the adaptive reuse industry converting history office buildings into hotels or apartments. We've looked at a number of modern era office towers, and housing is simply not viable. To your point though.. ironically, urban factories and warehousing seems to me to be the best use. Can you build a small electric vehicle or iPhones with the assembly line going from top to bottom? Banks are already there for unloading these properties. I can show you million-square-foot office towers today that are essentially free to acquire, but you get to pay tax, insurance, maintenance, keeping the lights on and functioning for any future use, a few million a year minimum, with no revenue. Some groups thought they could mine bitcoin, but the floor fell out of that. At the end of the day, since there are substantial costs involved with the tower itself relative to a warehouse, the tower should used for something that also requires a large number of people. A datacenter-type use is best if located near cheap electricity - not usually city centers. Lastly, office towers are usually located amongst excellent mass transit, even in cities with poor transit options, but the typical office tenant (bankers, lawyers, financiers) will not accept mass transit as an alternative to 1 parking space per employee. But factory workers will if it works!
  - brookst 4y ago
    Super interested in your industry! 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.
    - rsync 4y ago
      If you search for it you will find a fairly recent episode of KQED "forum" that discussed this topic for a full hour.
      - brookst 4y ago
        Thank you! Will find and listen.
      - halfnormalform 4y ago
        Thank you! FYI it’s from October 6th.
    - PraetorianGourd 4y ago
      Think of the layout of a modern office tower. Nearly open floor plans, one or two multi-user bathrooms per floor, one or two kitchenettes per floor. Designs optimized for ingress and egress via a single path. Sound abatement is minimal. Support columns are in the open. So at minimum, you would need to plumb and power each "apartment" which would require essentially a complete replacement of the plumbing in place, as well as the electricity. And since the units are distinct, you would need to meter and isolate each unit. You would need to ensure that each "apartment" had a reasonable exit for fire safety reasons. You are restricted by architectural/engineering decisions that were based on an open layout (aforementioned supports). Think of it this way, have you ever seen the progress as a tower is built? Isn't it remarkable how the "shell" or exterior seems to get finished in a blink, but the rest of the "innards" take 4 or 5 times as long to finish? In this case, most of the "innards" would need to be re-worked. Huge capital investment with unclear returns (nobody wants to live among the blight that a lot of west coast city centers are seeing).
- cudgy 4y ago
  Not everything is a tech problem requiring a VC. This just seems like old fashioned real estate investing.

brookst 4y ago

> It can be done, it can be tolerated, it's just not a very good or competitive product I agree with everything you said, just want to highlight that this quote is the classic statement of a business opportunity. There is a VC pitch here: a company that acquired distressed office space at scale, from panicked sellers, and with the expertise to do these conversions in a systematic, cost-optimized way. Banks are going to want to unload these properties as soon as they appear, for dirt cheap. Someone is going to make a lot of money by approaching the issue as a tech problem.

ethagknight 4y ago
I work in the adaptive reuse industry converting history office buildings into hotels or apartments. We've looked at a number of modern era office towers, and housing is simply not viable. To your point though.. ironically, urban factories and warehousing seems to me to be the best use. Can you build a small electric vehicle or iPhones with the assembly line going from top to bottom? Banks are already there for unloading these properties. I can show you million-square-foot office towers today that are essentially free to acquire, but you get to pay tax, insurance, maintenance, keeping the lights on and functioning for any future use, a few million a year minimum, with no revenue. Some groups thought they could mine bitcoin, but the floor fell out of that. At the end of the day, since there are substantial costs involved with the tower itself relative to a warehouse, the tower should used for something that also requires a large number of people. A datacenter-type use is best if located near cheap electricity - not usually city centers. Lastly, office towers are usually located amongst excellent mass transit, even in cities with poor transit options, but the typical office tenant (bankers, lawyers, financiers) will not accept mass transit as an alternative to 1 parking space per employee. But factory workers will if it works!
- brookst 4y ago
  Super interested in your industry! 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.
  - rsync 4y ago
    If you search for it you will find a fairly recent episode of KQED "forum" that discussed this topic for a full hour.
    - brookst 4y ago
      Thank you! Will find and listen.
    - halfnormalform 4y ago
      Thank you! FYI it’s from October 6th.
  - PraetorianGourd 4y ago
    Think of the layout of a modern office tower. Nearly open floor plans, one or two multi-user bathrooms per floor, one or two kitchenettes per floor. Designs optimized for ingress and egress via a single path. Sound abatement is minimal. Support columns are in the open. So at minimum, you would need to plumb and power each "apartment" which would require essentially a complete replacement of the plumbing in place, as well as the electricity. And since the units are distinct, you would need to meter and isolate each unit. You would need to ensure that each "apartment" had a reasonable exit for fire safety reasons. You are restricted by architectural/engineering decisions that were based on an open layout (aforementioned supports). Think of it this way, have you ever seen the progress as a tower is built? Isn't it remarkable how the "shell" or exterior seems to get finished in a blink, but the rest of the "innards" take 4 or 5 times as long to finish? In this case, most of the "innards" would need to be re-worked. Huge capital investment with unclear returns (nobody wants to live among the blight that a lot of west coast city centers are seeing).
cudgy 4y ago
Not everything is a tech problem requiring a VC. This just seems like old fashioned real estate investing.