From government officials to distressed landlords, everyone’s interest is piqued by the potential to convert underused office buildings into residential properties. But few buildings are actually good candidates for redevelopment.
Fewer than one in six office buildings across the country are primed to be converted into residences, the Commercial Observer reported. The finding comes from CommercialEdge’s Conversion Feasibility Index, which was created by Yardi Systems.
The index analyzed properties’ characteristics and location, as well as architectural and environmental factors. It found that only 14.8 percent of the nation’s office stock could be considered good candidates for conversion, and only 2.7 percent showed the “most favorable characteristics.”
While the share of office buildings ready to be rolled into something else seems muted, it’s still 1.25 billion square feet of space — far from nothing.
Manhattan however is an anomaly. More than half of the borough’s office stock — 53.1 percent — are considered Tier I or Tier II candidates for residential conversions, according to the index.
New York City has been pushing hard on office-to-resi conversions. Mayor Eric Adams launched the Office Conversion Accelerator to streamline the process; since the program began, 69 property owners have expressed some level of interest.
State lawmakers in New York also created a tax break to spur the creation of more affordable housing within conversions, though it’s unclear how much developers are going to leap at that incentive.
Beyond the Big Apple, San Francisco is the next largest hive for solid conversion candidates, counting 25.8 percent of its office stock as having potential.
Other major cities analyzed for conversion potential include Los Angeles (24.7 percent), Chicago (18.6 percent) and Miami (16.1 percent).
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