Office-to-Residential Conversions: Not a Panacea - Most office buildings are not

Trusted Insights for What’s Ahead™ • The US office building market is in decline, with buildings facing occupancy levels at 50% of prepandemic levels, declines in asset values, increases in vacancy rates, and the possibilities of defaults and “zombie buildings.” • Office-to-residential conversions are not physically suitable for about 90% of office buildings, and they financially work in only a ha. [...] Office-to-Residential Conversions: What’s Feasible? City officials, urbanists, the business community, and even the public regularly point to the opportunity of converting obsolete office buildings into multifamily residential units, particularly as the US struggles with an ongoing shortage of affordable housing. [...] These floor plates are easier to find in office buildings constructed in the early 20th century but harder to find among the buildings facing obsolescence that were built in the 1980s to 1990s. [...] The paper notes that about 12% of office buildings in the US’s 105 largest cities are physically suitable for conversion; however, the costs for most of these would not prove affordable to the average renter. [...] In May 2023, the New York City Economic Development Corporation and the New York City Industrial Development Agency launched the Manhattan Commercial Revitalization program to provide financial assistance in the form of tax incentives to support renovations of commercial office buildings south of 59th Street.