Is it time to convert empty offices into housing?

Welcome back to Straight Talking PropTech.

I recently listened to a great podcast from 99% Invisible about the opportunities and challenges of turning empty offices into housing.

As host Roman Mars explains, most big cities have a housing crisis. And at the same time, there’s a lot of empty office space right now.

This is causing a whole range of problems, with empty office towers creating a domino effect known as the ‘urban doom loop’. 

In the US, lower property taxes are forcing cities to cut spending, which is forcing residents and businesses to go elsewhere and inadvertently leading to a big increase in crime and homelessness.

Converting offices into housing seems like an obvious way to solve all of these problems at once, but despite all the hype around ‘adaptive reuse’, there are very few renovation projects actually underway.

Inspired by the podcast, I thought I’d use this month’s newsletter to look at why this is the case and have a think about what we can actually do with empty office space.

What are the structural challenges of office to housing conversions?

First things first, converting offices into housing is a massive undertaking.

It’s not just a case of throwing up a few more walls and installing a couple more toilets – there are a lot of structural challenges to contend with.

1. Floor plates

A hundred years ago, the floor plates of office buildings were often pretty similar to those of residential buildings. All light and ventilation was natural, so offices would be relatively narrow to make sure every employee could be close to a window.

But over time, with the invention of air con and fluorescent lighting, office floor plates have become a lot wider and deeper. This has created an obvious problem for potential conversions, leaving a lot of interior space that's no way near a window.

2. Natural lighting

Off the back of the last point, a lot of cities – including New York and London – have legal requirements that bedrooms have access to natural light. This means developers working on office to residential conversions are left with a bunch of empty space in the middle of buildings.

One option is to fill them with amenities like gyms or game rooms, but as Emily Badger explains on the podcast, “You don't need 20 floors of game rooms in a modern apartment building.”

3. Plumbing

Another obvious issue is that conversions end up needing a massive overhaul of plumbing systems, as flats need more water and sewer lines to accommodate for additional bathrooms.

It’s safe to say it can be pretty costly and complex to go from two big bathrooms on an office floor, to 50 small bathrooms for a load of residential units.

And these three issues are just the start – this article highlights plenty more things that need to be considered, including electrical revisions, HVAC loads, and fire safety.

What about the cost?

On top of all these structural challenges, there’s also the age-old problem of cost.

We all know there’s a massive need to solve the problem of affordable housing, but realistically, office space conversions are most likely to end up as luxury apartments rather than affordable ones.

It’s predicted to cost between $200 and $300 per square foot to retrofit, and there are also concerns that reuse projects could end up having a knock-on effect on residential prices in the surrounding area.

Realistically, the only way flats are going to end up being affordable are if there are incentives or tax breaks from local governments, and there hasn’t been much movement on this so far.

What about the regulations?

One of the biggest problems in New York City is getting around zoning rules. 

A lot of buildings constructed after 1961 are not eligible to be fully converted, and the deadline is 1977 in the financial district. Plans have been announced to update the rule, but nothing has been finalised just yet.

And in London, there are a whole range of specific rules that you need to comply with, including:

• The property needs to be vacant for three months before the date you submit your application
• It needs to have been in Class E use for at least two years (offices, estates agents, employment agencies, etc.)
• You can’t make any external changes to the building
• The building needs existing doors you can get bins and bikes in and out of 
• The building needs enough existing staircases and exit doors for fire safety

It’s clear that as things stand, there’s a whole lot of red tape standing in the way of office to housing conversions.

So what is the solution?

Just because office to housing conversions are complex and costly, it doesn’t necessarily mean that they’re never going to work.

There are also lots of other potential uses for abandoned office buildings, including medical centres, vertical farms, and my favourite suggestion I’ve heard so far – pet care facilities.

The biggest question still remains: who’s going to pay for all of this?

No one has all the answers right now, but there’s definitely a big opportunity for the most innovative developers to convert empty buildings into successful projects.

Extra content

That’s all from me for today, but I thought I’d leave you with a couple of things I’d recommend reading, watching, and listening to:

• Article in The Times about the companies clamping down on WFH
• Metrikus’ webinar about the ROI of smart building projects
• Michael Przytula’s podcast about measuring workplace occupancy 

If you’re looking to stay up to date with interesting articles and industry news, make sure you’re signed up to Metrikus’ newsletter, The Measure Monthly.