Number Of Old Office Bldgs Converted Into Apartments Hits Record High
USA – Data from apartment-search website RentCafe show that property developers in the country have transformed a record number of ageing office buildings into apartments, reported CNBC on Wednesday evening (24 November, SGT).
Between 2020 and so far this year, 41 percent of apartment conversions came from old office buildings. This has led to the creation of 13,250 new apartment rental units.
This record conversion from ageing office buildings represent a trend since the past 10 years, said Tracy Hadden Loh, who researches commercial real estate (CRE) and is a fellow at The Brookings Institution.
In an interview with CNBC, she explained that companies have allocated less square-footage per employee for years, as workplaces shift from private offices to open floor plans. But as businesses require less workspace amidst the COVID-19 pandemic, landlords are scrambling to attract new tenants, sometimes residential occupants.
This trend could pick up as hybrid work becomes more ubiquitous in the post-COVID world, as businesses slash their office footprint and property developers figure out how to convert their commercial properties into space that people will want to occupy.
With the COVID-19 pandemic nearing its 2nd year, office vacancy levels continue to be high across many major cities across the United States. In addition, a poll by PricewaterhouseCoopers (PwC) revealed that almost 33 percent of executives think that they’ll require less overall office space over the next 3 years.
Already, former office spaces are forecasted to account for 25 percent of converted apartments next year, and this is expected to add approximately 12,300 rental apartments units in the market.
Loh explained that cities with large office markets tend to have less residential units nearby. Given that business districts tend to be centrally located and highly accessible, properties there tend to be prized. Thus, real estate developers could be highly incentivized to convert expensive and unused office spaces into pricey and in-demand housing units.