💼🏢🏘️ Da Hurdles fo’ Converting Offices to Housing Stay Piling Up
As da pandemic dun disrupted how we live and work, many central business districts, from San Francisco to NYC, stay seeing record office vacancies and a steep drop in economic activity. One key solution proposed to help revive da area is to convert office buildings into apartments. But while dis idea stay gaining steam, da political fervor among progressive Democrats for compulsory affordable housing attached to tax incentives for conversions could dampen developers’ interest in da costly overhauls. Plus, it’s not clear any of da policy initiatives on da table will yield conversions on a broad enough scale to turn underpopulated downtowns into bustling residential neighborhoods. 😔💰🏢🏘️
A panel convened by New York’s governor and mayor last year sought to answer dis existential question facing many cities in da wake of da pandemic: what is da future of central business districts depleted by a sustained drop in office workers? Da panel proposed bringing in more housing, particularly through encouraging office owners to convert properties into apartments. New York may adopt regulatory changes to spur conversions as part of da state budget being negotiated in Albany. 🌆👥📈🏢🏘️
But converting offices into housing stay no easy task. For example, buildings in Lower Manhattan, which were converted in da last wave, were largely older office properties that had operable windows, so a conversion wouldn’t require a complete facade replacement da way buildings from da 1960s or later would. Meanwhile, Midtown office buildings are more likely to have structural features that complicate residential conversions, like large floor plans that make it difficult to break up buildings into individual apartments with sufficient windows. Da cost and complexity of these conversions, combined with da demand for affordable housing, may make it difficult for developers to justify pursuing these projects. 💸🤔🏢🏘️
As cities from Chicago to San Francisco to Washington also look to office-to-housing conversions, they remain expensive and logistically difficult to pursue. “I don’t think there’s going to be as much as people think there will be, unless there were a lot of incentives for people to get there,” said Marty Burger, chief executive officer at Silverstein Properties in New York, which is pursuing some office-to-residential projects. 💼🏢💰🏘️
Da current economic environment, with high interest rates and inflation, doesn’t make the calculation any easier. But some cities have taken matters into their own hands. In San Francisco, Mayor London Breed introduced legislation last month to remove certain city requirements that can limit office-to-housing conversions. Mayor Muriel Bowser in Washington, D.C., set an ambitious goal earlier this year of increasing the population of the city’s downtown from 25,000 to 40,000 over five years, alongside a program that would give office owners a 20-year tax break if they converted to housing and set aside at least 15 percent of homes for low- and middle-income households. 🌉🏘️📈🏢💼💰
However, the political climate may make things more difficult for developers. Da political fervor among progressive Democrats for compulsory affordable housing attached to tax incentives for conversions could dampen developers’ interest in the costly overhauls. Some experts argue there’s a benefit — particularly for the future financial health of Midtown — to a more direct approach, with government offering more generous incentives to actively encourage widespread conversions. Other experts say it would be a mistake to allow widespread conversions to high-cost housing without including affordable housing. 🤔👥💼🏢🏘️
NOW IN ENGLISH
💼🏢🏘️ The Challenges of Converting Offices to Housing Continue to Rise
As the pandemic has disrupted our lives and work, many central business districts across the United States, from San Francisco to New York City, are experiencing record office vacancies and a significant decline in economic activity. One potential solution to revive these areas is to convert office buildings into apartments. However, while this idea is gaining momentum, the political fervor among progressive Democrats for compulsory affordable housing, coupled with tax incentives for conversions, could dampen developers’ interest in these costly overhauls. Additionally, it remains unclear whether any policy initiatives on the table will result in conversions on a broad enough scale to transform underpopulated downtowns into thriving residential neighborhoods. 😔💰🏢🏘️
Last year, a panel convened by New York’s governor and mayor attempted to answer the existential question facing many cities in the aftermath of the pandemic: what is the future of central business districts depleted by a sustained drop in office workers? The panel suggested bringing in more housing, especially by encouraging office owners to convert their properties into apartments. New York is considering regulatory changes to stimulate conversions as part of the state budget being negotiated in Albany. 🌆👥📈🏢🏘️
However, converting offices into housing is not an easy task. For example, buildings in Lower Manhattan that were converted during the last wave were mainly older office properties with operable windows, so the conversion did not require a complete facade replacement as it would for buildings from the 1960s or later. Meanwhile, Midtown office buildings are more likely to have structural features that complicate residential conversions, such as large floor plans that make it difficult to divide the buildings into individual apartments with sufficient windows. The cost and complexity of these conversions, combined with the demand for affordable housing, may make it difficult for developers to justify pursuing these projects. 💸🤔🏢🏘️
Despite cities such as Chicago, San Francisco, and Washington, D.C., also considering office-to-housing conversions, they remain expensive and challenging to undertake. “I don’t think there will be as many conversions as people think, unless there were a lot of incentives for people to get there,” said Marty Burger, the CEO of Silverstein Properties in New York, which is pursuing some office-to-residential projects. 💼🏢💰🏘️
The current economic environment, with high interest rates and inflation, does not make the calculation any easier. However, some cities have taken matters into their own hands. For instance, in San Francisco, Mayor London Breed recently introduced legislation to remove certain city requirements that can limit office-to-housing conversions. In Washington, D.C., Mayor Muriel Bowser set an ambitious goal earlier this year of increasing the downtown population from 25,000 to 40,000 over five years, along with a program that would provide office owners with a 20-year tax break if they converted their properties to housing and reserved at least 15% of homes for low- and middle-income households. 🌉🏘️📈🏢💼💰
However, the political climate may make things more challenging for developers. The political fervor among progressive Democrats for compulsory affordable housing, coupled with tax incentives for conversions, could dampen developers’ interest in these costly overhauls. Some experts argue that a more direct approach, with the government offering more generous incentives to actively encourage widespread conversions, would benefit the future financial health of Midtown. Others argue that it would be a mistake to permit widespread conversions to high-cost housing without including affordable housing. 🤔👥💼🏢🏘
