All articles tagged with #office conversions
Manhattan's office leasing market is experiencing a strong rebound, with August leasing volumes surpassing 3.7 million square feet and potentially exceeding 40 million for the year, driven by demand from tech, legal sectors, and new construction, while office rents are gradually increasing and availability rates are decreasing, especially in newer buildings.
Downtown St. Louis faces a challenging office market as a 44-story tower, once valued at $205 million, recently sold for just $3.5 million. Meanwhile, downtown Dallas grapples with a 26.5% office vacancy rate, prompting corporate relocations to Uptown and a shift towards hybrid work models. The region's fastest-growing in-migration offers some hope, but large chunks of office space will require backfilling as major firms like Deloitte, Goldman Sachs, and Bank of America move to Uptown, leaving significant vacancies. Office conversions to hotel space and residential units are seen as a potential solution, but their success remains uncertain.
Converting office space into residential units to save commercial real estate is not a viable solution due to fundamental challenges. Office buildings are not designed for residential living, with issues such as limited plumbing and HVAC systems, lack of windows, and impractical floor plans. Moreover, there has been a growing trend of employees returning to the office, with only a small percentage working from home full-time. The future of commercial real estate lies in understanding employee data and providing a worthwhile commute, rather than relying on office-to-residential conversions.
Cities across the United States are looking to convert vacant office buildings into apartments as remote work becomes more prevalent. This trend is seen as a solution to address housing shortages, empty offices, and the climate crisis. Conversions involve adding amenities such as gyms, workspaces, and pools to attract residents and revitalize downtown areas. New York City aims to create 20,000 new apartments by converting old office buildings, while San Francisco faces challenges due to high construction costs and slow approval processes. Governments need to loosen zoning and entitlement restrictions and provide financing incentives to facilitate these conversions.
Boston Mayor Michelle Wu is proposing a property tax break of up to 75% over 29 years for downtown office building owners who convert their properties into apartments or condos, aiming to revitalize the neighborhood hit hard by the pandemic-induced office vacancies. This marks the first time the city has offered financial incentives to encourage office conversions as part of downtown's recovery efforts.