Your next apartment could be someone's old cubicle as developers rush to convert empty offices
- Cities nationwide hope to address multiple crises by converting vacant offices into apartments.
- Architects say conversions are increasingly in demand and will involve putting in lots of amenities.
Cities have accepted that you're probably not going into an office to work, so now they're hoping you'll live in one.
But what kind of life will that be?
The answer is: It depends on your city. As developers and politicians embrace the reality of fewer people going into offices, they've begun pushing initiatives that will ease the way for commercial buildings to become residential. For New York, this might mean more luxury, amenity-rich apartments to freshen up its old buildings and meet booming housing demand, while San Francisco could see more affordable living in a downtown that companies and wealthy residents have abandoned.
As big metros face three overlapping challenges — a housing shortage, empty offices, and the climate crisis — experts and politicians agree it's time for a major renovation.
"In the last less than a year, probably the last nine months, everyone's been like, 'OK, now we need to get serious about it,'" Steven Paynter, an expert in office-to-residential conversions at the architecture firm Gensler, told Insider. "Everyone's kind of understanding that we've reached a kind of plateau, or the new normal, in terms of what the amount of occupancy downtown is looking like."
That means it's time for downtowns to move to the next phase. Office conversions make sense for cities to help avert potential doom loops, which is when remote work leads to broken office leases, causing a never-ending cycle of reduced property-tax revenue, fewer amenities, and more people fleeing downtown areas.
Researchers say bringing more residents into central business districts to patronize local businesses, fill the parks and streets, and ride mass transit is key to revitalizing them. And that requires quality amenities such as gyms, workspaces, pools, bowling alleys, salons, and maybe even dog spas.
The Manhattan-based architect John Cetra, who has worked on office conversions since the 1980s, calls it "the amenity war." His firm, CetraRuddy, recently announced it's leading the conversion of a 30-story office building, formerly home to Goldman Sachs, in Manhattan's financial district. The building, at 55 Broad Street, will include 571 apartments and feature amenities like a rooftop pool and coworking spaces.
"It almost turns the building into a club, and the club gives you all of these amenities, and part of membership in the club includes an apartment," Cetra said. "The whole social aspect of it, I think, has become a big deal."
How your office becomes an apartment (hint: it's expensive but full of perks)
New York Mayor Eric Adams, who once famously derided remote work by saying, "You can't stay home in your pajamas all day," is wholeheartedly embracing a plan to turn empty office buildings into new housing. The city has a surplus of so-called "Class C" commercial buildings — which are the oldest, least desirable, and have the highest vacancy rates.
To determine if these and other types of buildings are suitable for conversion, Paynter developed an algorithm that looks at building size, layout, location, and how updated its facade is. Of the 950 buildings he and his team have surveyed, about 30% are suitable for conversion. He's also advised the White House on the issue. Late last month, the US Department of Housing and Urban Development announced it would award a grant to research obstacles to office conversions and how to overcome them.
Generally, experts say governments need to loosen zoning and entitlement restrictions to allow for this kind of development. And the rest comes down to financing, including potentially giving developers tax incentives and other carrots to build.
Paynter, who's based in Toronto, said Calgary, Alberta, is the "gold standard" for creating an environment for conversions.
"They just made it really simple," he said. "They took the regulatory and zoning issues out of the way, so if you don't make the building bigger, you can convert it, no problem. They put a very clear incentive program in place — $75 a square foot up to a cap of $15 million — very easy, and they acted really quickly."
This month, Adams announced a new initiative that aims to accelerate converting offices into residential spaces, with a proposal that would change regulations on conversions and free up 136 million more square feet of potential office space that could be transformed. Adams' goal is to create up to 20,000 new homes for 40,000 New Yorkers in converted office buildings over the next decade.
"It's a proposal that meets the moment that we are in. We've seen significant changes in the way people are living and working in a post-pandemic world," Dan Garodnick, the director of New York City's Department of City Planning, told Insider.
New York City has already had some success in converting office buildings to homes. In the financial district, conversions have helped transform the area from a nine-to-five neighborhood to a lively community.
But a shift to conversions has been slow in many places, including in San Francisco, which is facing a severe housing shortage, a struggling downtown, and is vulnerable to a range of climate impacts.
In June, the city rolled out a new initiative to encourage the conversions, but most commercial buildings are just far too costly to convert, Mark Hogan, a San Francisco-based architect, told Insider.
"If the overall project is twice as expensive as it needs to be in order for the conversion to make sense financially, tinkering with the building code is probably not going to get you to that level of savings," said Hogan, who advised the San Francisco Board of Supervisors on its policy reforms for office conversions.
Another San Francisco-based architect, Charles Bloszies, said that aside from high construction costs and slow approval processes, the cost of purchasing a commercial building in the city is still high enough to discourage buyers, and while there's demand for workforce and affordable housing, affluent people aren't particularly eager to live downtown.
"I've been in the building retrofit, rehab, remodel of large buildings for about 30 years, and we thought our phones are going to be ringing off the hook, but that's not been the case," Bloszies told Insider.
Hogan is optimistic that smaller prewar buildings in places like San Francisco can be more easily converted to housing. Garodnick said that in New York, there have been "many" landlords over time that were interested in converting but were ineligible for the program — something the Adams administration's proposals hope to change.
"Because office rents are in many cities fairly high to begin with, you need to convert it into an alternate use that's providing a similarly high level of cash flow," Arpit Gupta, an associate professor at NYU Stern School of Business, told Insider. Top of the market rents, then, make sense for the converted units — although his research finds that green subsidies might help fill the gap between conversion costs and affordable rents.
While these converted buildings will most likely house market-rate, luxury homes, they're expected to boost housing affordability. Research shows that increasing the supply of market-rate housing absorbs demand and slows the growth of housing costs. Still, the types of homes in these buildings — mostly smaller apartments — are limited by income and household size.
"You can't assume that everybody's going to be 27-year-old banker who's going to be able to afford this," Cetra said.