What’s everyone’s thoughts on these types of deals. Lot of talk in NYC that this is what to do with all the vacant B/C class buildings. I guess if you can convert at a reasonable cost per foot…. Anyone actually seen any numbers? Or they just assuming B/C office owners will start giving buildings away.
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Ah, the old office-to-resi conversion conundrum! It's a hot topic in the real estate world, especially in bustling cities like NYC. Based on the most helpful WSO content, there's a lot of chatter about this being a viable solution for vacant B/C class buildings.
The idea is that these buildings, instead of remaining empty, could be repurposed into residential spaces. This could potentially address the housing crisis and breathe new life into these structures. However, the feasibility of such a project would heavily depend on the cost per foot of conversion.
As for actual numbers, I'm afraid I don't have any specific figures at my disposal. The assumption seems to be that owners of B/C office buildings might be willing to let go of their properties at a lower price due to the current market conditions. But remember, this is all speculative and the actual scenario could play out differently.
If you're considering such a venture, I'd recommend doing a thorough cost-benefit analysis and perhaps even consulting with a real estate expert. After all, every building and every market is unique!
Sources: Would you ever consider working in Residential Development?, Downfall of RE, WHAT IS THE FUTURE OF OFFICE BUILDINGS?
I don’t work in the construction/development space, but from what I understand is that very few projects like this are feasible.
Mainly due to the vast difference in the internal design of office and residential MEPs making the process much more complicated than a ‘conversion.’ Coupled with already high construction costs AND high financing costs now on top of that.
The costs attributed sometimes are high enough where it would be cheaper just to tear down the building and start from scratch.
Again, not an expert in this space at all, but the only way I can see these projects getting done more consistently is through strong government subsidies.
And that brings us to the Office Question - Will present day office occupancy become the new norm and valuation mindset or will office come back or be reshaped in a major way?
No one knows, and personally I think that everyone is playing a waiting game at this point until somebody figures something out, makes a ton of money, then everyone who was patient enough jumps on the bandwagon.
Nailed it. It is so hard to get most floorplates to work. You pretty much have to be gifted with a very specific office building shape and that's before all of the other cost related issues.
I've seen it done twice on very rectangular buildings and tried to do it once myself on an S-shaped building. Very difficult.
It seems they are figuring it out in markets that took a hit. For example in Alexandria VA they did two office buildings to condo and it worked out so now 4 bigger buildings are being converted to MF.
same thing in DC near Fed Triangle. I wouldn’t be surprised if it’s possible in some of the older buildings in mid town and north of Wall Street.
Philadelphia is doing it along City line as well
But yes construction costs due to the internal infrastructure means they better understand costs and overages. Many many buildings that look like they could easily be converted are found to contain asbestos as well and then it becomes a thing
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