2024 Spring Issue of Urban Land - 35

CHRIS ROBBINS: We will definitely see more
office conversions over the coming years.
A number of class B and C office buildings
struggle with obsolescence, and if they aren't
converted or significantly upgraded to current
standards, they may not have a bright
future. There is a lot of discussion at a high
level about office-to-residential conversions
without necessarily a deep understanding of
the actual process to rezone, repurpose, and
redesign an office building for residential use.
While it may sound relatively easy to convert
vacant offices into multifamily buildings,
it's much more difficult in practice. To even
consider a conversion, one needs to identify
the right property in terms of floor plates,
location, age, and, of course, price, et cetera.
It's like a complex Rubik's Cube to determine
if it's structurally feasible to convert a building,
and if the costs and fees make financial
sense.
GEETI SILWAL: We have to keep fine-tuning
policies and regulations to create a more
feasible environment for conversions. Public
sector incentives for office-to-residential
conversions, like tax rebates and reduced
parking and affordable housing mandates,
are helpful moves. It will take a few years
to really see the impacts of these changes.
San Francisco recently temporarily reduced
the requirement for affordable housing in
some approved but unbuilt residential buildings
from 22 [percent] to 12 percent to aid
their feasibility. But we have to be careful
with these changes so that we don't exclude
a certain segment of the population in our
communities or veer away from resilience
commitments. Constant monitoring and calibration
are needed to encourage housing
production while ensuring long-term affordability
and delivering on sustainability goals.
KARIN LILJEGREN: The level of interest in
converting office buildings into multifamily
housing has grown exponentially. But the
prospects depend on acquisition costs, interest
rates, and incentives. There's going to be
[a] tipping point where conversions really
take off, but acquisition costs and interest
rates still need to be lower than they are
now, and there need to be more incentives.
That tipping point will arrive at different
SPRING 202 4
times, depending on the region, but once it
comes, there will be a flurry of activity.
What are best practices for evaluating
office buildings for conversion potential
to housing?
ROBBINS: First and foremost, assess the
market demand for whatever type of multifamily
project an office building could be
converted into, then work backwards from
there. Evaluate if the building can be physically
converted. That's where one should lean
on land use/zoning consultants, architects,
and structural and MEP [mechanical, electrical,
and plumbing] engineers, especially in
seismic zones like California, where older
buildings generally are not code compliant.
Can the floor plates and the MEP systems be
economically configured into unit layouts and
sizes that meet the demand in the market?
LILJEGREN: One of the best practices is to
have a design team that is highly experienced
in adaptive use, because they know
how to find opportunities in the challenges,
and they understand the process. You have
to start evaluating the building at a high level
... to understand if the project can pencil out,
and then you have to zoom in more as you
obtain more information to dial in the costs.
With new construction, you can do a sketch
and know, per square foot, how much it's
going to cost. But with adaptive reuse, it's
The Sears Landmark
Building in Los
Angeles's Boyle
Heights, once the
department store
company's West
Coast mail-order
distribution center,
is being converted
by Omgivning
for the East River
Group into a mixeduse
development
including 1,030
residential units,
as well as shops,
restaurants, office
space, and a rooftop
garden.
URBAN LAND
35
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2024 Spring Issue of Urban Land

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