Can Cities Convert Office Space to Housing?

Can cities convert vacant or underutilized office space to more housing units?

In theory the immediate answer is should be "Yes," yet the answer is more like "It's Complicated."

In fact if you Google "can cities convert office space into housing?" these are top 5 similar questions that "People also ask":

Equally as interesting here are also the search results from the 1st page on January 15, 2023. They are all links to articles from different publications that delve into the complexities of converting vacant, unused or underutilized office into housing:

1. "Cities push to convert deserted office buildings into housing" published September 2022 by Axios

2. "Why empty offices aren't being turned into housing, despite lengthy vacancies" published July 2021 by NBC News

3. "Why the dream of turning empty offices into housing is a bust" published December 2022 by Slate

4. "Converting office to residences can help fight the housing shortage" published December 2022 by Forbes

5. "Cities are turning empty offices into apartments" published April 2022 by Quartz

6. "Why it's so hard to convert offices into housing" published December 2022 by Quartz

7. "The top 10 cities turning old office buildings into apartments -take a look inside" published November 2021 by CNBC

8. "Newsom signs bill aimed to turn empty commercial properties into housing" published September 2022 by capradio

9. "Yes, S.F. could turn empty downtown offices into housing. Here is what it would take" published October 2022 by the San Francisco Chronicle

10. "Vacant stores will become homes more easily under new California laws" published September 2022 by NPR

Even before the work from home (WFH) phenomena started to create office vacancies during the height of Covid-19 the city planning world and policy makers had started exploring the idea of converting unused office space into housing as a strategy to tackle the housing affordability crisis plaguing many US cities.

Allowing housing in land currently zoned for office space helps to solve the problem of "where will we build it (more housing)" without perpetuating urban sprawl. So why can't we just do it? It's expensive. There's a ton of red tape and zoning laws that make it very hard to get a project approved and the conversion process takes a long time. The actual construction costs are also high, and in some markets it takes "almost as much money to convert an old building to residential as it does to build a new one from scratch." Also office rents are typically much more lucrative for developers than building housing units. So while the office building vacancy rate may make some building owners and developers reconsider their options, they also know the market is cyclical "would rather wait out the pandemic than begin a yearslong process."

Cities and states understand the potential this can have on their housing shortages and are putting policies into place to eliminate some of the land use red tape and also offer tax credit and financing tools incentives. Plus, repurposing existing underutilized buildings to higher use building also has some environmental benefits that make this strategy even more attractive. For instance, New York City's Office of Adaptive Reuse Task Force recently published their recommendations in a report. Last year, California, after years of pitching housing legislation finally passed two laws to accelerate housing construction around the state, Senate Bill 6 and Assembly Bill 2011.

Additional suggested readings

• Insights on the NYC Office Adaptive Reuse Report read these insights from land use & real estate law firm Kramer Levin

• Highlights on the two new California housing laws from the law firm Holland & Knight