Empty Office Spaces Can Be Converted to Residential Buildings – But It Won’t Be Affordable

Conor here: It’s unfortunate the authors don’t put a price tag on what they deem unaffordable. I was curious how it would compare to the $80-plus billion and counting the US has sent to fund its proxy war against Russia in Ukraine. If the US government was similarly motivated, here we have a project that would create jobs, help mitigate the spread of Covid by removing the incentive for return-to-office pressure, and could be used to end the national travesty of hundreds of thousands of people sleeping on the streets. Rather than a few localities offering incentives for the private sector, a government-led national effort would be “affordable.” Priorities.

By Jenny Baker and Leah Mo. Baker is a professor in civil, construction and environmental engineering at Iowa State University, and Mo is an assistant professor of civil, construction and environmental engineering at Iowa State University. Originally published at The Conversation.

Since the COVID-19 pandemic began, more companies have offered remote work options for their employees, or have even switched to working entirely remotely – leaving empty office buildings a new fixture in many cities. In July 2023, Boston’s Planning and Development Agency announced a pilot program to offer incentives to building developers who convert office buildings to residential housing.

As engineers who study buildings, we wanted to know if these empty spaces could be converted to residential buildings, and what hurdles developers would face.

While converting office buildings to multi-family residential involves many considerations – including zoning codes, real estate values and structural issues – certain buildings may be good candidates for this type of conversion. Here’s what it would take to remodel these spaces.

Redefining Space

First off, the building owners wouldn’t need to make any major structural changes to convert an office building to a residential building. Most office buildings are designed so that the tenants can easily build out the space to suit their needs. This means they can put up walls, take power where they need, and select finishes like flooring, paint and lighting.

With a conversion to multi-family residential, the shell and structural elements of the building would remain, while the building owners could add or move walls to create individual apartments. The costs for this interior remodeling would depend on the how fancy things like the countertops and light fixtures are.

But remodelers would also need to consider nonstructural building features, like windows. Windows determine the distribution of natural light in each residential unit. Narrower office buildings with more area along the perimeter – and therefore more opportunity for viewing windows – would transition more easily to residential than deep, rectangular-shaped office buildings. No one wants to live in a home with no daylight.

Electricity, Fire Alarm and Telecommunications

Residential and commercial buildings have different electricity needs. Residential buildings have kitchen appliances that require lots of power, but office buildings use more computers, projectors and copy machines – meaning the electrical load would likely be about the same. Office and residential buildings also have similar power needs for lighting.

The electrical load from heating and air conditioning would depend on the type of systems used. While the main electrical service of an office building might be an OK size for a residential building, remodelers would need to add a subpanel to each residential unit. U.S. code requires that all residents have “ready access” to the circuit breakers or fuses supplying their unit.

Residential units, left, and commercial units, right, use space differently and have different electrical, HVAC and plumbing needs. Osvaldo valdes/Wikimedia Commons and Aushist/Wikimedia Commons

Building owners would also need to add more fire alarm devices, since residential buildings have more rooms. They might need to revise the internet, telephone and cable systems, as well, to make sure each residential tenant has access to these services.

Though expensive, these electrical revisions are possible. The biggest hurdles would be adding the subpanels and metering to figure out how much each unit uses.

Heating, Ventilation and Air Conditioning

While commercial buildings usually have centralized HVAC systems, residential buildings need separate HVAC systems and controls for each residential unit. That being said, mid-rise and high-rise apartment buildings often use a centralized HVAC system with variable air volume units in each zone. Variable air volume units work together with a central air handling unit that supplies a constant airflow. Each variable air volume unit then adjusts the air flow for its specific zone. Each smaller apartment would be a zone, but some larger apartments may need multiple zones.

Residential buildings typically have a smaller HVAC load than office buildings, meaning the existing HVAC system would be larger than needed for residential reuse. Oversized air conditioning systems often have humidity problems – add to that the fact that residential tenants create more humidity from showering, doing laundry and cooking. The way to mitigate humidity here is through additional exhaust fans. Variable air volume units would also help keep the extra humidity under control. Building owners would need to pay for these additions, as well as ductwork remodeling.

Plumbing and Fire Protection

In office buildings, most plumbing is centralized, often in the building’s core. For instance, bathrooms tend to be grouped together and located in the same spot on each floor. However, in residential buildings, plumbing is distributed throughout. Each unit typically has its own bathroom and kitchen, and each requires drinking water and sanitary sewer.

The biggest issues here would be the service sizes – or how large the pipes serving the building are – and the interior plumbing system. The service sizes for water and sewer in an office building may not be big enough for residential uses. This would depend on local codes and the number of plumbing fixtures. It’s likely that the pipe for a sewer utility connection would need to be larger for an apartment building than for an office building. Also, the interior plumbing system would need a remodel to serve each residential unit.

Reworking the plumbing for water should be possible. However, reworking the sanitary sewer system would be much more difficult, especially on upper floors. Gravity makes things run downhill, and longer horizontal pipes need more vertical drop to keep things flowing in the right direction. This remodel would require new plumbing chases – vertical cavities that pipes run in – to accommodate the sanitary sewer and vent piping needs. Adding these chases would likely require core drilling of floors. If the owner wanted to invest the money, it would be doable – but expensive.

The fire sprinkler system would likely need revisions once the new walls go up, but the size of the pipe bringing water to the sprinkler system should be pretty close to the right size.

New Life for Vacant Buildings Is Doable but Not Easy

No one wants to see office buildings sitting vacant, as vacant buildings can diminish surrounding real estate values. Converting an office building to a multi-family residential occupancy is possible. It would, however, not be cheap.

But office buildings that are due for a remodel or upgrade anyway could be great candidates for this type of reinvention. If the building systems – HVAC, plumbing, electrical – are due for replacement, the project becomes more cost effective. With demand for rental units outpacing growth in new supply, and many cities like San Francisco and Boston offering incentives to convert, there is potential here. For someone with a creative vision and a building in the right location, this could be a successful and innovative project.

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  1. PlutoniumKun

    Its impossible to make many generalisations about office to residential conversion as there is simply too great a variety of building types – each with its own issues. An old rule of thumb used to be that re-using the shell of a building saved 20% over ‘new-build’, but I suspect that doesn’t hold as with modern construction techniques new shells can be built fast and (relatively) cheap relative to fit-outs. The latter is still labour intensive, while the former is now heavily automated.

    Many office buildings are just too deep for suitable reconstruction as residential, at least without losing lots of space or having unlit rooms. Floor to ceiling heights are also important, and this tends to vary significantly depending on the date of construction. Also, many offices have very large service cores in the centre, making dual aspect apartments impossible to provide (depending on local climate, this is a very important consideration in liveability).

    Construction type is also important – as a general rule of thumb, a steel frame building is far easier to convert than one using reinforced concrete, especially pre-cast. Depending on whether there is a false floor (a common thing in late 1980’s/1990’s offices) or a false ceiling, the cost of putting in new services can be a very tight constraint.

    You also have the issue of how buildings sit in their urban landscape. Many office buildings lack the private or shared open space and other amenities ensuring that even if they are successfully converted, they simply won’t make very nice places to live. External structures can be built to provide balconies, but this can be very expensive. Offices are rarely built with considerations like easy access to shops or schools.

    A classic of the genre (if a little out of date now), is ‘How Buildings Learn‘ by Steward Brand – he highlights particular issues with modern construction techniques which can result in ensuring they are impossible to re-use compared to older building types.

    So unfortunately, we are tightly constrained by previous bad building habits. In numerous cases, demolition and rebuild is still the only viable alternative.

  2. TomDority

    Millions of people un-housed and millions of spaces un-occupied. To me, this means something is akimbo.
    Looking at Michael Hudson’s – the truth about inflation says what is to be the cause of this “housing crisis”.
    You can convert all you want, you can raise wages, supply subsidies and do many things but, they will not work so long as you have vast private wealth pouring money into asset price inflation encouraged by legislative and tax policies designed to maintain inflated real-estate prices.
    It does not matter how cheaply a conversion is… the cost will go up to remove any incremental gain in incomes or subsidies or carve away any reductions in taxes or incentives.
    If you turn a basic essential to living and working into a gambling chip on the speculators table – you get all bets against the house to raise asset prices…unfortunately, for the majority not in the game, the house always wins

  3. FreeMarketApologist

    …would also need to consider nonstructural building features, like windows…

    Many post-war office buildings do not have openable windows, yet many building codes require openable windows for residential units, thus significantly driving up costs for conversion.

    And per the “…how buildings sit in their urban landscape…” comment above: Zoning changes to permit residential have to consider whether the local area has the infrastructure (schools, groceries, transportation) to support residential rather than office use.

    The Bloomberg “Odd Lots” podcast had an excellent episode last week on this topic — they spoke with a development/investment guy who heads up a team that does the conversion analysis. In NYC, conversion costs seemed to run in the 800- $1000/square foot range, which results in a rather expensive unit for sale or rental.

      1. jsn

        I used to design private apartments in old apartment buildings.

        There are a lot of logistical constraints on this kind of work, gutting and re-doing the whole building would be cheaper, but would have all the problems mentioned by PK am FMA above.

        I used to tell my apartment clients, “complete the design, document it properly and send it out for three competitive bids: then add them up and pick the contractor you like best.” I never had a contractor exceed expectations set by this process.

    1. TomDority

      Sorry to disagree on some minor points
      “Many post-war office buildings do not have openable windows, yet many building codes require openable windows for residential units, thus significantly driving up costs for conversion.”
      Because openable windows in more than four or five stories presents problems for pedestrians and can cause severe stack effects which could blow the contents of your desk out the window and work havoc on your HVAC. Residential units up to or greater than three stories are compartmentalized for fire code and operable windows included as part of fire egress and safety issues. – the significant driver of cost is not the windows but the other changes to building – HVAC, Fire Egress, Additional Plumbing – all the stuff any shell would need – new build or old
      “Zoning changes to permit residential have to consider whether the local area has the infrastructure (schools, groceries, transportation) to support residential rather than office use.” Most Zoning Residential as the highest (good) use for building – and zoning office use considers transport, infrastucture, water run off, and fit with community (not be spot zoning) – residential does not, it does consider in-keeping with the general area and health safety issues. Zoning is life safety and maintaining non-hazardous coherent communities empowered under states constitutions police powers acts.

      I may be wrong but a conversion analysis will look at what a market will bear at a maximized profit margin to a target demographic buyer

      1. Sardonia

        “I may be wrong but a conversion analysis will look at what a market will bear at a maximized profit margin to a target demographic buyer”

        Yes, this is what will by looked at by anyone who is willing to spend the time and $$$ doing a conversion. BUT, even in these analyses that put the conversion cost at up to $1,000 per square foot (or more) – that’s still leaving out a HUGE disincentive for anyone who might otherwise be interested in taking on such a project – to wit:

        A cost that is NOT included in this conversion cost is the fact that, even if everything were to go perfect, the conversion MIGHT pencil out to make sense, before Dollar One can be spent doing a conversion, the converter would need to spend years and millions of dollars just trying to get all of the zoning changes, building code exemptions, variants, etc., etc…. (and possibly never getting all the approvals, so….money down the drain) for a conversion that may or may not pencil out, even if everything ends up going perfectly.

        Also, it’s a pipe dream to think that one can just convert any office building that seems the most adaptable – because these buildings are not totally vacant. One might have a 50% vacancy rate, but that means that the other 50% of the building is leased to businesses that will NOT tolerate all of the heavy, noisy construction going on in the next office suite, or in the floor above, etc. etc. Trying to do this kind of heavy construction in a building that still has paying tenants occupying half the building means lawsuits from those paying tenants because they cannot work in that environment.

  4. DJ's Locker

    It doesn’t need to be “affordable”. If it increases supply, something else may become or otherwise remain “affordable”.

    1. jsn

      This would be true of government managed housing as a public good.

      The market makes sure what’s affordable gets torn down to make room for what’s profitable.

      Low interest rates ensure what’s unaffordable can stay that way for a very long time.

    1. Sardonia

      I would wager that that unit will sell for over asking price.

      $520,000 for 1,066 square feet in San Rafael (Marin County – great amenities in town?. Most condos, homes, etc, sell for well over that price per square foot in San Rafael.

      Someone (maybe many someones) will see this as a great opportunity for doing their own creative interior design.

  5. John

    There are many unaddressed issues here, but the authors have made a good stab.

    Some unaddressed issues not easily solved include:
    – social isolation caused by how we build our cities with individual units where there is no contact between neighbors. A local economy that brings people together is required (Shops, services, production of goods and services)
    – I am hearing more and more about blackouts. High rise buildings with no power are not usable as without the elevators, and pumps for the water, no one will want to be higher than 4 stories.
    – The skills to to create and maintain the spaces are being lost. I live in an expensive neighborhood, where my neighbors buy $700,000 houses then let them fall down because they lack the skills to maintain them, and can’t afford to pay someone else
    – Housing with out income is pointless. So you move all these people into the space. Unless an economy emerges to support them, they won’t stay. Perhaps a better approach would be to use these empty buildings as factories, or turn them into vertical farms

    1. Aleric

      I wonder if it would be cheaper to convert offices into SRO or dorm-style occupancy. Keep the centralized services together in the core as a shared kitchen and bath area, and have private rooms/suites around the edge. Seems like it could be a lot cheaper conversion though probably more complicated with zoning and political support.

      1. TimH

        It would be have to be as you say to retain the HVAC as ‘whole building’, and keep minimal communal toilet facilities.

        Retrofitting the plumbing and wiring for resi will only be do-able if all the affected interior divisions/plasterboard are removed, and without ripping up the (concrete?) floors the sewage runs and cleanouts will be ‘interesting’ to design.

        Apartments need balconies too.

      2. ambrit

        This would fit nicely with a shift in social norms from “rugged individualism” to “neo-serfdom.” As has already been proven out in the Orient, dual use structures, factory in one section of the plant, and dormitory accommodations for the carbon based lifeform work force in the other segment can become a new “norm” in living.

  6. dougie

    No one wants to live in a home with no daylight

    If my alternative was sleeping in the street, I wouldn’t give a diddley damn whether or not my housing had natural daylight, just sayin’

  7. The Rev Kev

    I’m afraid that I would be dubious about the chances of this idea succeeding on the grounds of something that happened about 20 years ago. After 9/11, the Feds gave the city of New York billions of dollars so that it could rehabilitate itself after the damage that was caused and its collateral effects. But it was discovered later that most of that money went to the high end of town for accommodation for wealthy people. And the feds let them do it but it was George Bush after all. Maybe even Trump had some of his fingers in some of those pies at the time. So although turning empty office spaces into residential dwellings sounds like a great idea, I suspect that when it is all said and done, that most of those residential dwellings would be only for millionaires who want to live in the city.

    1. S.D., M.D.

      Virtually all of the residential conversions in NYC were of the glorious jazz age towers and similar buildings.
      They are slender with small floors, solving the issue of light and windows(pretty certain that building codes there require every actual bedroom to have an exterior window, so conversion of bulky post-war blocks is an absolute non-starter). They were also unappealing as office buildings, warrens filled with relatively low rent tenants like dentists and accountants and upgrading would have required gutting them anyway.

      The converted buildings are certainly high end, although the developers may have been required to offer some small number of units subsidized for low income folks.

      Such projects have made Wall street and the surrounding area a popular residential ‘hood.

  8. mrsyk

    Thanks Conor, and I think your lede (is that called a lede or an intro?) is correctly pointing out the true headwinds.
    Converting office space to housing will never happen in an environment where ROI is the deal maker/breaker. Converting office space to housing will never happen if that housing is meant to be high end market inventory because it will never be that. However, if viewed as an investment in society (read subsidized affordable housing), maybe? I’m not well read on urban renewal, but shouldn’t the transition from office ghost town to a lived in neighborhood via a transfusion of working class inhabitants have considerable economic upside?
    This, of course, is just another academic conversation. Never going to happen.

  9. jrkrideau

    Though expensive, these electrical revisions are possible. The biggest hurdles would be adding the subpanels and metering to figure out how much each unit uses.

    This is simply a code/cultural issue as it looks like some of the otheers are. Do a code re-write, a real revision and many problems go away. Something like plumbing is a serious issue.

    BTW, how many building codes does the USA have (not including municipal) The last time I looked, which was about 25 years ago in looked chaotic.

  10. jhallc

    So all those warehouse conversions to “artist” lofts/condos in NYC and other areas were not economical? I’m not disagreeing with the authors that it might be cost prohibitive in some cases/areas. In Lowell, MA a number of old 3-4 story textile mills have been converted to condos. Must have been doable.

  11. Craig Dempsey

    I live in Portland, Oregon, where we have a notorious homeless problem. People are living in tents on sidewalks, freeway banks, scattered all over the place. The city is trying to replace the homeless encampments with planned campgrounds. It is challenging. The thing that gets me reading this post is that an office building could be converted to a homeless shelter with almost no conversion work. You could even leave cubicles in place, just take out the desk units so there is room for cots. Management offices could become shelter management offices. Communal restrooms with real running water and flushing toilets would be a major upgrade for most homeless people.

    The big challenge would be funding the staffing and resources a houseless population needs. This is not to say there is no place for high-end conversions and middle class apartment conversions. Different types of buildings may work best for different markets. Those big boxy office buildings that do not convert well for individual dwellings just might work well as homeless shelters. I wish Portland would try!

  12. Glen

    Redefine affordable.

    Just say having a society which can eliminate homelessness will help defeat Russia and China.

    Oh look, it’s now affordable.

    1. Cat Burglar

      You are right on target. That is how they work.

      Notice that industrial policy was outside the Overton window until China was declared an adversary, and — voila! — we had an industrial policy.

      Can they pull off being the biggest power on the planet, with a growing number of citizens that can’t afford shelter, and a nation that doesn’t make much of what it uses? They can’t even come up with enough ammunition to win a small sized war.

      My “acoustic monitoring system” tells me that the hull of AmericaGate’s vessel isn’t taking the pressure.

  13. dandyandy

    Physically, technically and practically conversion of an office building into a residential one is a doddle. We’ve designed a number of these for professional developers here in U.K. Providing you try and work around existing structures (particularly vertical elements ie columns and core walls), then indeed there’s plumbing, air cons, windows and so on. Foundations get a reprieve because residential loading allowances are much lower than commercial.

    Technically plumbing is a non-issue – if the residential layout dictates waste pipes away from (originally provided) vertical runs around the structural stability core, all that is required are few more vertical drops dotted around the building footprint. 4” or 6” vertical downpipes can accommodate 50+ flats apiece. Cost – pittance – drilling 50 or 100 or 200 4” or 6” pipes through 4-5-6” thick concrete slabs.

    Electrical supplies- well, run some wires into the building. All the central city locations where this type of conversion may apply in, are riddled with power supply substations. Cost- compared to benefits – nothing to break the contract sum. Once supply is in the unit, then it’s just wiring, sockets, light fittings and so on.

    Air conditioning – Stateside this may be a big ticket – office aircons are mainly centralised but even if this needs to be split into multiple resi units, then a great deal of (space consuming) ducting can be reused although individual units condensers would have to be introduced. What do these cost – not more than $10k per unit.

    Structure is by default capable. If you don’t mutilate it much, there is no need for a big budget entry for this.

    Elevators are centrally placed in offices, these can remain where they are and do what they already do – cost, pittance.

    Windows- some places allow openable windows to 15-20 storeys high (London), whereas in others you can’t open a window if you’re 4 storeys or higher (I remember a hotel in South Beach Miami where windows were screwed shut, and aircon was a rickety cheapo creapo type destroying our sleep through the night).

    Layouts – if your office building is no more than 20x20m in plan, you can get sunlight free of charge into principal (outer) rooms which will be bedrooms and living rooms, keeping the bathrooms and kitchens under artificial lighting. If your office builds say 60×50 meters in plan, easy again, open up daylight cores in intermittent locations through the height of the building (cutting out some beams and floors not an issue as long as you don’t touch the vertical elements). Cost – not pittance but minor for this type of conversion.

    I suppose my long diatribe above is intended to suggest that benefits of conversion of buildings less than 50 years old is a no brainer (providing no dodgy materials were used like alumina cement or RAAC or such like, or dodgy construction methods like Southside Condos that collapsed recently or the Tamiami bridge with a mutilating structural system that also collapsed recently).

    Conversion of offices into residential in CBDs in USA or U.K. or elsewhere is and will remain a political issue – what kinds of residential tenants will be desired or welcome in these areas.

  14. manderson

    This is a great start at some of the issues that the conversions may face. I note that Boston has taken the leap and is determined to make it affordable with massive tax relief for the developers. https://www.boston.com/news/real-estate-news/2023/07/11/boston-launches-program-to-encourage-converting-underused-office-buildings-into-residential-use/

    Another issue not highlighted here is that if the commercial building was built with post-tensioned concrete, then drilling extra conduit holes for all the individual utilities mentioned in this article can be a hard task (need to map all rebar in the building). The structural standards are different too as residential means more live load and commercial is generally more static (e.g., desks).

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