2024 Fall Issue of Urban Land - 95

Office-to-Residential Estimated Budget Breakdown
Services
Shell
Interiors
Site and Ancillary Work
Source: Gensler
per square foot, with apartments already
renting for about US$90 per square foot.
Chilelli estimated that the project could
have been done for $300 per square
foot, but the final product would have
been of lesser quality. Much of the construction
cost was in the structural steel,
followed by HVAC, MEP, and fixtures and
finishes.
Lessons learned
Most of the successful office-to-residential
conversions to date are Class B and Class
C buildings built in the 1960s and 1970s.
These buildings are attractive because
they tend to have smaller and more readily
adaptable floorplates, and they are
cheaper to buy than buildings of later
vintage are.
A summary of lessons learned from
the interviews and literature appears in
Figure 4. Based on its analysis of more
than 1,300 buildings, Gensler estimates
that approximately 34 percent of office
buildings in the United States are convertible.
Cities range from 15 percent to
40 percent. Older cities with no downtown
street grid system, such as Boston,
have fewer viable buildings because
fewer of them are rectilinear.
Although office-to-residential conversions
will not solve the nation's affordable
housing shortage, they represent
an important option for redeveloping a
large part of the stock of vacant office
buildings. In so doing, they offer a viable
approach for reactivating downtowns that
are suffering from high vacancies and are
restoring the tax bases that have eroded
from declining office and commercial
values.
Buildings with the wrong shape are
impossible to convert. Preferred physical
characteristics include the following:
Window depth ideally is about 35
feet (11 m)
Floorplate should be narrow to
allow for greatest efficiency
Floor-to-floor height should be at
least 9 feet, 8 inches, for a 9-foot
ceiling height; typical office
building heights are 11-14 feet
Creativity is essential in figuring
out how to get these projects done
Economic considerations
Time is the biggest factor that
makes or breaks conversions. The
less time required, the more
feasible the project. The reason
conversions are feasible to begin
with is that they take less time
than a new build and can be up to
30 percent-40 percent cheaper.
Time includes vacating spaces
that have existing tenants.
80 percent-85 percent efficiency
for conversions is typically feasible,
whereas for new builds, it is 75
percent-80 percent
The more units, the better for
efficiency; typically, at least 60 units
is desirable.
Buying the offices cheap is also key
to making the conversion pencil out.
The biggest cost is mechanical,
electrical, and plumbing.
Gensler estimates that conversions
typically cost US$300,000US$350,000/square
foot.
Political considerations
Governmental support is needed to
make conversions feasible. Support
may take several forms:
o Tax incentives (New York City)
and other incentives such as
additional FAR
o Subsidy (Calgary)
o As-of-right zoning (Calgary); New
York just introduced it
o Quick approval process (Calgary)
o Inventory of convertible buildings
o Low-interest loans (Canadian
government's CMHC)
A wider plan must be in place, with
area-specific goals to ensure that
buildings are surrounded with uses
compatible with residential UL
RICHARD PEISER is the Michael D. Spear Professor of
Real Estate Development at the Harvard Graduate School
of Design (GSD);
EVAN KINDLER is a master's student in the Urban
Planning Program at the GSD
STEPHEN PAYNTER is principal and global practice
area leader for research at Gensler, based in Toronto.
FALL 202 4
URBAN LAND
95
INDUSTRY VOICES
2024 Fall Issue of Urban Land

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