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From Cubicles to Condos
The rise of remote work has significantly impacted the traditional office space landscape, leaving many office buildings to gather dust. But instead of demolition, repurposing these office buildings into multifamily housing is breathing new life into these vacant structures. This shift in philosophy presents a promising solution to addressing both the surplus of unused office space and the increasing demand for affordable housing.
Why Convert?
Several factors are driving this conversion trend:
High Demand for Housing: Many cities grapple with a shortage of rental units, making conversions an attractive option to meet resident needs.
Vacant Office Space: The shift to remote work has left many office buildings underutilized, creating a surplus of available space.
Financial Incentives: Some governments are offering tax breaks or other incentives to developers who undertake these conversions. Clockwork has worked with Historical Tax consultants on two downtown Kansas City landmarks, converting from office space to Multifamily; Flashcube & Southwestern Bell (AT&T) area corporate offices.
The White House has released a commercial to Residential Federal Resources Guidebook, October 2023, listing over 20 federal programs to be used to support conversions. Including but not limited to low-interest loans, loan guarantees, and tax incentives to list a few.
Location Advantage: Many office buildings are located in central business districts or urban areas with access to transportation, amenities, and services. Converting these buildings into residential units can provide residents with convenient access to urban amenities and employment opportunities.
Sustainability Benefits: Repurposing existing buildings reduces the environmental impact associated with new construction, including materials extraction, transportation, and waste generation. It also helps preserve historic or architecturally significant structures, contributing to sustainable urban development.
Community Revitalization: Converting vacant office buildings into residential spaces can breathe new life into neighborhoods and contribute to community revitalization efforts. The presence of residents can increase foot traffic, support local businesses, and enhance the vibrancy of the area.
Challenges and Considerations
While promising, converting office buildings to multifamily units isn't a simple process. Here are some hurdles to consider:
Cost: Significant renovations are often required, bringing the building up to current building code and updating utilities to handle the increased demand.
Building Suitability: Not all office buildings are ideal for conversion. Floor plans, ceiling heights, and window placements may need significant alteration.
Zoning and Permits: Obtaining the necessary permits and navigating zoning regulations can be a time-consuming process.
The Future of Office-to-Multifamily Conversions
Despite the challenges, experts predict this trend will continue. As remote work becomes more permanent, the need for office space will likely decrease. With proper planning and incentives, office conversions can be a win-win for developers, residents, and cities looking to revitalize their downtowns.
Clockwork has worked on multiple office building conversions, working with developers to leveraging local, state and federal incentives to enhance the feasibility and profitability of the building conversion. Three recent examples of collaborating with Historical tax credit consultants and developers are FlashCube (8th & Main), AT&T Muiltifamily (8th & Cherry), and Fashionbilt.
