While the concept of converting empty office space into a functioning multifamily apartment complex is attractive on a number of levels, actually making such a conversion work is both more difficult than it seems and not as beneficial as initially expected.
Converting an office into a condominium or multifamily apartment complex involves more than just renovating the structure to make it attractive to potential renters. Before the complicated redevelopment process can begin, developers must navigate complicated re-zoning processes to obtain necessary entitlements. Further, many office buildings are structurally unsuitable for conversion. For example, most of the older office buildings that are candidates for conversion were not originally designed to allow natural light to permeate throughout the interior. The costs to complete necessary structural renovations are also likely to be prohibitive. For example, the plumbing system of an office building will likely need to be totally re-engineered to support multiple distinct residences per floor.
Even if these types of projects are successful, there are not likely to be a significant number of conversions. Because transforming the structure takes identifying the perfect candidates and spending significant time and resources to turn that office into a living space, there are not likely to be a large number of these types of redevelopments actually taking place. Then, even if the re-development process is successful, that conversion is unlikely to result in the creation of a large number of apartments and condominiums per building. After all, most condominium owners and renters occupy more living space than a single cubicle.
These types of projects are certainly intriguing and worth pursuing, but they are not quite the silver bullet that will solve all the issues with both the market for commercial office space and housing supply.
