Top real estate agents in the U.S. have been warning about the glut of unwanted commercial office space ever since the COVID-19 pandemic began and continued to get worse throughout 2021. With the federal government mandated that most people in many states work from home remotely, office space not only went underutilized, but the rent wasn’t being paid. This put serious stress not only on building owners, but also on the banks that financed their commercial real estate loans.
But when the pandemic was declared officially over, something else happened that no one expected: The Great Resignation. Many corporate workers decided they no longer wanted to return to an office environment and sit inside a four-by-four cubicle all day, getting soft around the waistline, and just dreading every minute of every workday. They wished to continue working remotely or look for a new career.
Now, vacant office towers from New York City to San Francisco are selling for half their original value. There is simply a lack of interested buyers willing to put up the big bucks. So then, what does a building owner do to rekindle rental or purchasing interest in their unused office space?
According to a new report by LoopNet, with office space use declining throughout the COVID-19 pandemic, the idea of transforming office buildings to accommodate other uses was tossed around by real estate agents, property owners, and designers.
However, there’s no denying that the investment in building space conversion is time consuming, and financially risky. Taken along with the recent CRE credit crunch, soaring interest rates, and municipal building restrictions, fewer and fewer construction starts are taking place.
But despite these problems adaptive reuse or office conversions are still happening, however slowly.
Regardless of these challenging conditions, office conversions (also known as adaptive reuse) are indeed occurring, albeit slowly, and every day there are more examples of completed projects.
Here are some tips that come from completed projects all over the U.S. you might wish to employ in your office space conversion.
Underutilized New York City Office Properties Converted into Residential Spaces
LoopNet communicated with two architects who were able to recount the long history of office to residential conversions that have been occurring in the Big Apple for decades. They detail the positive aspects that make a compelling case for turning unused office space into multi-family use apartments.
The aspects are said to include humbler floor plans, additions of terraces, balconies, and courtyards, plus big windows for more sunlight, and high ceiling heights for a better sense of space.
High-rises that contain unique facades are also said to be excellent candidates for transformation since they add a distinctive appeal to the building as it goes from being a place of work to a home sweet home.
In short, office to home conversions is not a new idea when it comes to New York City.
A $500K-plus Renovation Transforms an Iconic Chicago Skyscraper into a Mixed-Use Destination
As of 2009, the old Sears Tower (renamed the Willis Tower in 2009) in Chicago was said to be no longer meeting the many needs of the estimated 15,000 office workers or the close to two million annual tourists who flocked to its famous Skydeck.
It was also failing to meet the many needs of the 170,000 city dwellers who lived within a five-minute walk of the old high-rise. With engineers and architects focusing on the needs and wants of the three user groups, the tower redesign focused on providing beverage, food, and retail offerings.
Not only had these much-needed offering been absent from the Willis Tower, but they were also fairly nonexistent inside its Loop neighborhood.
Arlington Empty Offices Are Transformed into Breweries, Distro Hubs, and Labs
Arlington, Virginia’s municipality is said to have taken an “damn the torpedoes” approach to cure its office vacancy issues. It seems like every day more new use categories are being proposed by property owners and investors alike.
Many have already been approved and they will be providing what’s been called a “rich variety of activities” that include higher education, artisan workshops, micro-fulfillment centers, craft beer and wine making, digital gambling, urban agriculture, medical and dental practices, wet labs, food delivery services, and even ghost kitchens.
Arlington municipal officials are said to be doing their best to modify existing ordinances to include these many new uses “by right.” This means that business and building owners can avoid the lengthy rezoning and planning board processes that can typically hold up an existing unwanted office space from being transformed into something salable.
There’s presently a glut of office and even shopping mall space presently in the U.S. This situation is likely only to get worse as the digital transformation surges forward. But with a little ingenuity, investment, and zoning law cooperation, many of these buildings can find new life for a brand-new generation.