Corgan’s Post

Office to Residential Conversions - Not as Simple as it Seems! Over the last couple of years (as I saw 15 years ago during the last downturn), I've seen a surge in interest and fielded a number of calls about converting vacant office buildings to residential units. While it's an exciting idea to address both California’s extreme housing needs and vacant spaces, it's crucial to dispel some common misconceptions and highlight the challenges involved. Myth Busters: 1) It's a quick fix for empty offices: Think again! Feasibility studies, zoning approvals, and construction itself can take years, making this a long-term play. 2) It's always cheaper than new construction: Not necessarily. Extensive plumbing, electrical, and life/safety upgrades can bring costs close to or exceeding building a new property from scratch. 3) Any office building can be converted: Location, layout, depths of floors (from corridor to window) and building features significantly impact feasibility. Not all structures are created equal for residential living. Challenges to Consider: 1) Zoning hurdles: Local regulations might not permit conversions, requiring variances and community buy-in. 2) Financial viability: Careful market analysis is crucial to ensure sufficient demand and rental rates justify the investment. 3) Building limitations: Older structures might lack essential elements like natural light, proper ventilation, and efficient layouts for multiple units. The Bottom Line: Office-to-residential conversions hold potential in extreme and rare use cases, but it's a complex undertaking. Seek expert guidance from experienced brokers, architects, and engineers to navigate the intricacies and ensure informed decisions. Have you seen any interesting office-to-residential projects recently? #sacramentorealestate #officeconversion #housingmarket #development #commercialbroker #sacramento #cre #commercialrealestate Turton Commercial Real Estate

I'm a huge fan of repurposing otherwise redundant buildings. Between 2021 and 2024 over 55,00 units were under construction within office to multifamily conversions. This article looks at the 5 largest conversions underway in the US. #officeconversion #construction #repurpose #multifamily #officetomultifamily

Few observations on how the office to residential conversions can help adressing housing crisis in Germany #design #office #reuse #repositioning #adaptivereuse #residential #conversions #big7 https://lnkd.in/e8RjBQ-U

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

2024 Insights--Office To Multifamily Conversions. Office conversion projects are set to double this year, indicating a growing trend in the real estate industry. Read on. #BASE4design #multifamily #apartmentconversion #housing

Good article to remind us all that post-pandemic there is yet another solution to the housing crisis. Although it's doubtful these conversions will address the issue of affordable housing, it is nonetheless a step in the right direction. #construction #building #housing

“More broadly, building residential real estate may not be lucrative to developers, says Kevin Wallace, president of Wallace Properties. “The problems with office conversions go well beyond MHA and design review, and converting office to [residential] is a distraction from the bigger issue — it no longer makes financial sense to build housing in Seattle,” he said.” I’m hoping that the discussion of office to residential conversion leads Seattle to realize their regulatory straws have broken the camel’s back when it comes to housing development in general. The cranes are largely coming down at the end of the year, and they aren’t going back up anytime soon. Absent a big drop in interest rates (unlikely), it’s going to take a long time and a lot of rent inflation to get housing development restarted. If Seattle and other cities in the region eliminate the regulations that are stifling development by increasing cost of construction and operation and decreasing the ability to collect revenue, new development will restart sooner.

Thanks to Kevin for his perspective. This is an unfortunate truth that has a huge impact on more than just commercial property owners and investors. As a member of a local construction union, we see the actions of Seattle chasing off prospective investors in new construction first hand. Thousands if not tens of thousands of union and non-union families in this area rely on this new construction as their primary source of income. The elected officials making these political decisions are directly affecting our ability to put food on the table. This will also hurt the people that rely on services provided by local and state government, because the loss of these incomes hurts the local economy and eliminates an entire tax base that supports these programs. Once our jobs are gone, where do these bureaucrats and politicians think they will find the money, or is it as simple as raising the taxes on businesses, property owners, sales, and everyone else still working in our area? This just makes the situation worse, and this repetitive cycle is exactly what’s driving away people now. When people leave our area, they take their money with them. I wish the people making these decisions would stop selling this like a “Rich, getting richer” issue and start considering the working class that willingly pay taxes to support our community. It seems like simple math that even a caveman construction worker like myself can manage.

Be very cautious. Not impossible but.. Speaking as a Developer, it's not as easy as one might think. 1. Property almost always has to be rezoned from Office to Residential and many cities prohibit that since property taxes are 3x higher in Commercial. 2. Layouts of office floors are usually deep from the windows to the elevators requiring long narrow layouts. 3.Parking.. Many office buildings have 3 or 4 levels of underground parking. Cities are reducing car parking in favour of bikes and autonomous advances. 3 underground levels of parking are no longer required.😳 Condos prohibit parking being rented to outsiders (security) and they sure wouldn't want useless parking levels being part of their condo corporation for taxes and maintenance. 4.Leases..a Developer would have to wait until all leases expire to be able to start jackhammering in an empty building, demolishing all interiors back to the structure, and replace windows. 5. Development financing..You have to buy the building and hope that you can get the rezoning approved ( 2-3years) as the leases end and the building progressively empties draining cash flow. You then have to put your equity in first prior to Construction Loan, requiring Preleasing. https://lnkd.in/gTNxdaJ8 #developer #construction #planning #design #affordablehousing #affordablerentals #realestate #commercialrealestate #condos #realestateindustry #interestrates #loaninterest #inflation

"While it may sound relatively easy to convert vacant offices into multifamily buildings, it’s much more difficult in practice. To even consider a conversion, one needs to identify the right property in terms of floor plates, location, age, and, of course, price, et cetera. It’s like a complex Rubik’s Cube to determine if it’s structurally feasible to convert a building, and if the costs and fees make financial sense." --Chris Robbins, GREENROCK™. Recently, I interviewed four experts about the realities--and the promise--of converting office buildings for residential use in urban cores. Urban Land Institute Sibley Fleming Brett Widness Mary Ludgin Chris Robbins Karin Liljegren Geeti Silwal #commercialrealestate #adaptivereuse https://lnkd.in/gpcRmadb