Office-to-Residential Conversions: Not a Panacea
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Office-to-Residential Conversions: Not a Panacea

/ Brief

As cities, businesses, and the public examine how to revitalize urban districts postpandemic, converting obsolete office buildings for residential use is often raised as a possible solution. However, a deep look at the viability of this adaptive reuse shows that it is not realistic for the vast majority of office building stock.

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As cities, businesses, and the public examine how to revitalize urban districts postpandemic, converting obsolete office buildings for residential use is often raised as a possible solution. However, a deep look at the viability of this adaptive reuse shows that it is not realistic for the vast majority of office building stock.

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 handful of US cities—where rents command a high price and housing is already constrained. Any broad adoption of office-to-residential conversions to tackle housing affordability would require public incentives.
  • Cities, businesses, and the public will need to come together to reimagine how residential and other uses can revitalize urban centers as large office districts become more obsolete.

For more insights on this topic, see:
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Author

Erin McLaughlin

Erin McLaughlin Erin McLaughlin

Senior Economist, ESF Center
The Conference Board

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