Despite the tragedy, some developments from the COVID-19 pandemic had a promising angle. For example, remote work and vacant office space looked like a great opportunity to help tackle the housing crisis.
A recent white paper by the market research firm Guidehouse Insights looks at this trend and makes some notable, if sobering, observations.
Published in September, “Prospects for Adaptive Reuse of Office Buildings” examines the potential for converting vacant offices to residential buildings in the United States.
The paper’s authors note that in the last year, a growing number of municipalities have proposed initiatives to convert vacant commercial offices to multifamily buildings. Several factors have contributed to this trend.
According to Guidehouse, office building vacancy rates are at a 30-year high. This statistic is due largely to the surge in remote work created by stay-at-home work orders issued by state and local governments to slow the spread of COVID-19. The orders may have been temporary, but the change in behavior was not. Since the pandemic has subsided, workers are free to go back to the office, but many businesses and their employees have not returned.
At the same time, state and local governments are grappling with a worsening housing affordability crisis.
Many have argued that the convergence of the two presents an opportunity. The idea of converting vacant and unused office space into residences holds the promise of increasing housing stock in cities where it is desperately needed without having to build new structures.
However, the solution is not that simple. Guidehouse notes that “the reality of retrofitting offices to residential uses is far more complicated than updating zoning laws.” The white paper explains that building systems and configurations in commercial buildings, such as electrical systems and wiring, HVAC systems, plumbing, ventilation and windows tend to be “vastly different” than those in residential buildings. To retrofit a commercial building to a residential building, these details require such extensive renovations that “any advantages of working with an existing building are typically negated.”
Despite these challenges, renovations will occur. Guidehouse expects office-to-multifamily conversions to most likely occur on a one-off basis due to the unique set of circumstances that need to exist for a project to be viable.