In a damaged business environment post-pandemic, metro office spaces are left abandoned, but options for redevelopment could offer an innovative solution for affordable residential housing. According to Realtor.com, metros across the U.S. are tallying office vacancy rates over 20% as remote work becomes increasingly and permanently prevalent.
While quiet office spaces could be reconstructed into new condominiums or luxury apartments, builders are weighing the costs of reparceling and utility servicing to create potential housing, especially during a costly international supply chain storm. Government incentives are pushing metropolitan repurposing efforts to reduce disused office space, but redevelopment could take a significant amount of time.
David Bitner, global head of capital markets insights for global real estate serving firm Cushman & Wakefield, said the concept of making abandoned urban offices into condos or rental properties remains in its infancy as the industry comes to terms with the transformational necessities.
“The reality is that it is typically difficult and expensive to convert urban office space into residential use,” Mr. Bitner said. “For many of these to pencil, you would need to have buildings that are substantially vacant and have undergone dramatic write-downs. There are certainly cases where this will transpire, but it will only ever be a marginal influence on the office and multifamily markets, respectively.”
Mr. Bitner said conversions of older warehouses to offices was a niche or opportunistic development trend driven by demand for adaptive re-use offices from top-tier tenants. The pre-divided office layouts may not lend themselves as easily into homes.
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