Is Part of the Solution to the Housing Problem Already Built?
December 21, 2022
The affordability of housing in America is a well-documented growing issue. Some public officials have declared it a crisis. The recent spike in mortgage rates certainly will not improve the situation. Public officials and developers have been searching for policies and real world opportunities to provide more affordable housing, but there are no easy solutions. A recent article by Mike Bebernes on Yahoo! News looked at whether America’s growing vacant office space can be redeveloped to provide for more affordable housing options.
Bebernes begins by providing compelling data demonstrating the growing amount of vacant office space in America. The coronavirus pandemic ushered in a new era of hybrid work situations and, in some cases, a significant growth in entirely work from home arrangements. The result of that major shift in where people work is a significant decline in the demand for office space. Bebernes notes that office occupancy rates in major urban markets are half of what they were before the pandemic. These growing vacancies can have a dramatic effect on commercial property values and the resulting tax revenue. There’s also a secondary negative effect on the surrounding retail and food services often found near that office space.
Bebernes offers up the conversion of that office space into affordable housing as a possible “win-win” situation. The buildings already exist in markets in desperate need of more affordable housing. The buildings usually are multiple-stories which provides the opportunity for greater density, which so often is the key to making affordable housing economically feasible for the developer. As noted above, the surrounding retail and food services exist to support the housing. In an ideal scenario, the influx of housing could create new neighborhoods in the traditional sense.
But, Bebernes notes that it’s not as simple as it sounds. Modern office buildings do not have the design and layout that’s necessary for a quick conversion to residential units. For example, the layout may not provide for enough light to enter the building. Also, the materials used may not be what’s required under residential building codes. Taken together, the cost of completing the conversion can make the prospects economically infeasible.
Bebernes’ article goes on to offer a spectrum of perspectives from industry professionals and analysts outlining the pros and cons of the conversion opportunity. Like all things surrounding the issue of affordable housing, there are no easy answers. But, Bebernes offers up interesting thoughts that you should consider if you have the opportunity to redevelop vacant office or if your municipality has growing office space vacancies.
If you have any questions about this post, please contact a member of the McNees Wallace & Nurick Land Use Group for assistance.