Houston Chronicle’s Post

Offices Into Housing…Easier Said Than Done   Christopher Thornberg, founding partner and economist wit Beacon Economics, said at a recent presentation fo San Jose State ““How do you make housing more affordable? You build more housing… “You need to start taking down these office buildings and putting up apartments, However, Thornberg said he prefers “adaptive reuse” of existing office buildings rather than projects that bulldoze office structures. Too much demolition could create “dead zones” in urban areas”. In my previous blogs I have mentioned repeatedly that over time office buildings that are physically or economically obsolete will be demolished and replaced with housing. There will be very few that are transitioned into housing due to the constraints most buildings have with central restrooms, air conditioning, too-large floor plates to allow residential conversion with window access, and a host of other issues which makes most office buildings non-conversion candidates. Demolishing means the value of the office building goes down to less-than land value as you have to deal with the cost of demolition and disposing of the rubble. #OfficeConversion;#OfficeBuildings;#Housing; #SIOR

Per Yardimatrix data, 38% of adaptive reuse conversions to apartment units come from the office sector. Some benefits and obstacles are below: - Reduce exposure to a foundational shift in demand away from the office product. - Federal funds, grants, and tax incentives are available to assist in covering acquisition, pre-development, and construction costs. - Demand in the long-term for apartments outpaces supply significantly, especially for mid-tier rent levels. - Floor plates and ceiling heights in office buildings can make for truly unique apartment floorplans creating a competitive advantage. - Mechanical, electrical and plumbing infrastructure, as well as floor plates, make it very costly and at times prohibitive to convert to apartments. - The immediate surroundings of existing office buildings may not foster the desirable lifestyle commensurate with the rents being sought.

🔹 New industrial zoning within the City of Vancouver took effect in February that sets the stage for new forms of mixed-use buildings. 🔹 The updated I-2 rules will allow a greater range of office uses in industrial-office projects, adding businesses like medical, dental, legal, accounting, real estate, insurance and other types of typical office work. 🔹 The combination of industrial and office uses in a major mixed-use development is relatively new but it’s helping address the need for diversity in local economies and communities. #industrial #vancouverrealestate #zoning #mixedusedevelopment

Couple of examples of successful office to residential conversions in this article. This continues to gain momentum as an alternative use to redundant buildings. #officeconversion #renovation #construction https://lnkd.in/eBbuBzg2

Houston is undergoing a significant transformation, with old office buildings like the 372-unit Elev8 at 1801 Smith transitioning into modern apartments. This change is a response to the city's 25% downtown office vacancy rate. Despite financial challenges, including high conversion costs and limited government subsidies, the movement gains momentum. Elev8 exemplifies this shift, overcoming economic barriers to set a new urban living standard. However, projects like the Esperson complex and the former Exxon skyscraper face hurdles, relying on historic tax credits for viability. Yet, with over 150 million square feet of office space in Houston, the potential for conversion is substantial, albeit underutilized due to stringent eligibility for tax benefits. Most of Houston’s office towers are too young for those juicy tax breaks, leaving a gap between potential and reality. For developers, it’s a hunt for buildings ripe for transformation, ideally without breaking the bank. #HoustonTransformation #UrbanRevival #OfficeToResidential #EconomicChallenges https://lnkd.in/g9kfV6yQ

Mixed-use projects are a great compromise for single-family communities hesitant to approve multi-family projects. Mixed-use is a win for small businesses, municipal tax revenue, infrastructure improvements, and an alternative to home ownership.

Office Buildings Around the Bay Area Planned for Demolition, Replaced With Housing I was in a recent meeting and was made aware of multiple suburban office buildings where the tenants had been on month-to-month and were all finally given notice to vacate. I met with a major office park investor who is planning on demolishing a number of very nice Class A office buildings, relocating the tenants to other office properties they own, and then turning the land into residential development. This is happening all over the Bay Area, and it is so hard to believe at times that a mid-rise Class A office building has reached to point where it is worth less than the land it is sitting on. Two very positive aspects of this-less office space and those tenants having to vacate will increase occupancy at other buildings that sorely need tenancies; and we need more housing…still sad to see an office building that might cost today $500-700/sf to build being torn down because there isn’t enough demand for office space…#OfficeBuildings; #OfficeDemolition; #OfficeVacanacy; #ResidentialDevelopment; #SIOR

https://lnkd.in/g8vxAaJX The linked piece offers another look at offices-to-housing conversions, examines what makes an office building a good fit for reuse, and discusses potential impacts on the dearth of housing. #housing #offices #adaptivereuse #officestohousingconversions

Boston stands out with the largest office construction pipeline in the U.S., boasting nearly 13.9M SF under construction. This represents 5.6% of the existing market stock with greatly exceeds the 1.2% national average. This development activity includes significant contributions from submarkets like Cambridge, Seaport, and Fenway. The city's construction landscape positions Boston uniquely in the national office market context and reflects (relative) resilience. In other words, for those who are discouraged by the current office landscape - there are much worse market conditions out there. Keep your head up and "survive 2025." #office #construction #bostondevelopment #bostoncre https://lnkd.in/eMnAsXBv

Size matters when we're talking about London offices! The amount of space under construction in units bigger than 100,000 square feet rose to an all-time high of almost 15 million square feet in the first half of 2024. In stark contrast, for the first time in at least 20 years, no new #office schemes smaller than 100,000 square feet started in central #London in either the first or second quarter of 2024. What does it all mean for the London office market? Find out more below ⬇ CoStar UK