Can empty offices be a solution to the housing crisis?
“The 360” shows you diverse perspectives on the day’s top stories and debates.
What’s happening
Two and a half years after the coronavirus pandemic forced companies to abruptly transition to remote work, cities are facing the reality that many workers are likely never going to return to the office.
Though daily rates of infections and deaths are a fraction of what they were in the worst days of the pandemic, occupancy rates for offices in the nation’s 10 biggest cities are only about half of where they were before the virus arrived.
That’s a problem not only for companies that want to have employees work in person. The massive reduction in daily commuters flooding into central business districts has meant restaurants and other businesses have seen their potential customer base reduced dramatically. Less demand for offices could also cause a major drop in the value of commercial real estate — a decline of much as $453 billion in New York City alone, according to one study — which means less property-tax revenue for cities.
Rather than let these offices sit empty forever, a number of cities are exploring whether all that space could be used to solve another major problem: a chronic housing shortage that has caused the cost of living in many major cities to skyrocket.
The concept of turning commercial space into housing is nothing new, but the sheer number of empty offices and storefronts across the United States has led some lawmakers to believe that a mass conversion campaign could solve the nation’s housing crisis. One of the more aggressive moves came last month in California, where the state enacted a pair of laws designed to encourage housing development in underutilized office and retail properties.
Why there’s debate
On the surface, the idea of turning empty offices into housing seems like a straightforward win-win. Optimists say that it would not only add millions of housing units in areas that people are eager to live in but that those new residents would also help revitalize downtown areas that have languished without a steady stream of daily commuters. Others argue that local governments can help promote the transformation with financial incentives and more permissive laws for projects aimed at flipping vacant buildings.
But skeptics say converting commercial space into housing is a lot more difficult and expensive than many seem to think. One of the biggest issues, they say, is that the layout of many modern office buildings makes them poorly suited to serve as living spaces. Specifically, sunlight can’t reach the center of many buildings’ sprawling floor plans, making it hard — or even potentially illegal — to turn them into living spaces. Some experts say there simply aren’t enough convertible buildings to make any real difference in the country’s housing stock.
Another major hurdle is that residential conversions may not make financial sense for a lot of developers. Some believe the best bet is to hope that in-office work rebounds over the next few years, while others may decide that using the space for other purposes — like warehouses or scientific labs — will be more profitable.
Perspectives
Offices shouldn’t sit empty when so many people need a place to live
“With what seems like a renewed urgency to get ahead of the looming real estate problem — if it’s not too late — maybe now cities like New York will decide that some of the collateral damage from COVID-19 is permanent, and will require new solutions. Instead of waiting for businesses to come back to Midtown, let’s do something useful with the corporate spaces that used to bustle with activity.” — S.E. Cupp, CNN
Most offices aren’t well suited to become housing
“Office buildings built in the 1950s or later have none of these qualities. Their floor plans were designed to squeeze the maximum number of people onto each floor, and there isn’t enough natural light in most places. The windows usually don’t open and need to be replaced to meet residential needs. In short, they are no bargain to convert, and for the most part they are not being converted. The easy ones have already been done.” — Alan Ehrenhalt, Governing
Residential conversions can turn downtowns into real neighborhoods again
“The rise of remote work today won’t kill off our downtowns, but they will be forced to change once again. And with smart strategies and perseverance on the part of city leaders, real estate developers and the civic community, they can become even better than they were.” — Richard Florida, Bloomberg
Lawmakers must be willing to dramatically reform building codes
“For this to work properly, the city must revisit its onerous and restrictive zoning ordinances, which sometimes make conversion of office space impossible, or at other times merely make it a massive, costly and logistical headache.” — Editorial, Daily News
Residential space isn’t as profitable as other potential options
“Importantly, apartments rent for way less, making the move less financially attractive to building owners.” — Rani Molla, Vox
Office conversions can make only a small dent in the housing crisis
“It’s a compelling fantasy … but the reality is likely to be much different: Developers, planners, architects, and financiers warn that while such metamorphoses are not impossible, they’re much more likely to be modest affairs rather than dramatic transformations.” — Adam Brinklow, The Frisc
The housing crisis is so severe that every possible solution needs to be pursued aggressively
“Empty shopping malls and other unused commercial space should be the first places to look. They already sit on large plots of land in the urban infrastructure. But the housing crisis requires that all options for locating building new units — parking lots, underutilized retail strips and dying malls — should be on the table.” — Editorial, Los Angeles Times
Retrofitting offices is too expensive to be viable outside of the most expensive cities
“If you’re used to worrying about the urban shortage of affordable housing, this might seem like a problem with an easy solution: convert empty commercial buildings into much-needed residential units. That’s likely to happen in some cases, particularly in older buildings with conversion-friendly footprints. But conversions will be expensive, and while we’re likely to see them in New York or San Francisco, rents can’t necessarily justify the cost outside of the hottest markets.” — Megan McArdle, Washington Post
Even when conversions do happen, they won’t lead to more affordable housing
“Despite the lack of affordable housing, most office conversions are built as market-rate apartments for professional-class millennials to make the economics work for developers.” — Will Parker, Wall Street Journal
The plan will only work if it’s centered around creating affordable housing
“Developers have converted commercial space into housing for decades. Old mills, factories, and hospitals have become residential lofts and apartments. … But rarely have these efforts been steered specifically toward affordable housing. Now, however, with remote work emptying downtown offices while affordable housing in metro areas continues to be scarce, cities have a chance to deal with both issues at once.” — Miles Howard, Boston Globe
Flipping offices isn’t an immediate solution, but it can be a long-term game changer
“Saying goodbye to concentrated office districts and 9-to-5 downtowns is probably a process that will play out for decades — part of the pandemic’s lasting impact on our lifestyles and communities.” — Kate Marino, Axios
Builders and residents will have to be more willing to accept imperfect housing designs
“Obviously not ideal to create lots of windowless bedrooms, but it’s better than having central business districts full of half-empty office buildings while rents and homelessness rise relentlessly.” — Matthew Yglesias, policy journalist
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Photo illustration: Yahoo News; photos: Getty Images
