There’s about 998 million square feet of office real estate across the United States that’s available but in search of a tenant.
The vast amounts of empty commercial real estate and it’s becoming a crisis for building owners. But some politicians and business leaders hope they can be converted into something new — and transform downtown neighborhoods.
That’s thousands of old cubicles, conference rooms, pantries and cafeterias sitting in ghostly quiet. That’s a vast amount of empty space — nearly 13 percent of the market — that could be turned into two-bedroom apartments, big-box retailers, boutique hotels, community college classrooms or even studios for artists. At least that is what city governments and developers are discussing with more urgency, as researchers estimate that office value will plunge 39 percent from pre-pandemic levels.
What looks like a catastrophe to many building owners presents an opportunity, a possible catalyst for converting some older office spaces to new uses and transforming downtown neighborhoods into areas where people can also live, especially as the United States faces a deficit of more than three million homes. City and business leaders from New York, Chicago, Philadelphia and Boston began a series of meetings, convened by the Brookings Institution, where they will exchange ideas on re-envisioning the future of their downtown business districts.
Couldn’t at least some of those empty buildings be housing? Especially in cities like downtown Boson where apartment rents continue to rise and availability is scarce, that is one of the more compelling proposals being discussed. It’s also one of the more complex ideas.
One of the obstacles is that most office buildings are laid out differently from residential spaces. They might have columns every 20 feet, windows that don’t open and too much space from wall to wall. And, most critically, office real estate has historically been far more expensive per square foot than apartments.
But if office value eventually dips low enough, some real estate developers are noting, the math for more conversions could begin to work out.
Between 2016 and 2021, 218 offices across the country were converted to other uses, or about 36 each year, according to the real estate group CBRE. Roughly 40 percent of the conversions were for multifamily housing, creating 13,420 apartments. This year has seen a slight uptick, with 42 office conversions completed so far across the country.
Source: The New York Times