The idea or converting unused office space to affordable housing in our urban cores seems to pop up from time to time, and it is sadly not nearly as simple as people think (as evidenced by the photo above). This post is perhaps a little specific to NYC (where I live), but I’m sure it holds true for many other cities as well. Let’s start with two tweets:
I replied in a thread to the above tweet:
This isn't as true as many of us would hope, but it least it's more true than some of us might fear. It does depend pretty heavily on the specific industry. More traditional ones are pushing hard to go back to the office already (especially banking).
I work in tech, and it's pretty unlikely most of us will be back in person (at least not fully), but there are definitely valid arguments to be made for going back (especially mentorship opportunities and career advancements in many fields).
Additionally, I still don't think collaborative tech is really up to the level of being able to replace in-person creative jam sessions and the like in fields like design and advertising. It's getting better, but it's still clunky as hell.
I'm a programmer but also have a ton of experience in design. It's hard to replace an in-person design-to-dev handoff meeting with Zoom or InVision comments. Figma and others can certainly supplant a lot of whiteboarding exercises, but some things don't translate well digitally.
That said, a note of optimism: the demand is so high now that the tech will likely follow. It's really a matter of time. I can't pretend to know what that will ultimately look like, but as these COVID variants keep going around, it becomes more and more likely.
Additionally, businesses will gradually start to see it as a chance to reduce overhead, both in leasing costs and the ability to hire cheaper labor in more far-flung spaces (I'm already seeing that in parts of the tech world).
So, two main points here, starting with the first twitter thread:
First, I don’t think these offices will remain empty for the foreseeable future, however, it is fairly obvious to me that the commercial bubble is going to have to witness a correction at the very least (and I said even before the pandemic that I thought it was a bubble at risk of bursting). Stuff like this was showing up in my feed all the way back in 2013:
Yahoo! Finance: Manhattan Commercial Real Estate Is Overvalued Compared With Property in Other Major Global Cities, Say NY Area Commercial Real Estate Executives in a Recent Survey
It remains true today, only more so as these posts from 2021 and 2022 respectively highlight:
CNBC: ‘We’re not out of the woods’: How commercial property could spark a financial shock
Bloomberg: New York City’s Empty Offices Reveal a Global Property Dilemma: The rise of remote work will hurt older buildings, leaving landlords in the lurch
However, as outlined in my first tweet thread above, do we know what the state of office usage is going to look like ten, five, or even two or three years from now? There is a TON of pressure coming down from managers and executives at large corporations to get people back into offices and damn the consequences. That’s one of the reasons behind the so-called “Great Resignation”, especially among workers caring for children and the elderly.
Some of that office stock will refill, and we have been seeing quite a few new buildings continuing here in NYC anticipating that. What I haven’t seen is occupancy rates, and I suspect much of that construction is speculative and/or on projects already funded and started (think Hudson Yards in the case of the latter, Midtown East in the case of the former, and some mix of both on the work happening around Penn Station).
Now for the second point:
That original tweet up above was then quote-tweeted with this additional reply:
Here is my reply to that tweet and its reply:
There are also legal requirements that apartments have access to minimum amounts of daylight through windows - this can be a huge problem for office buildings that typically have large floor plates. The only way to deal with that would be large common areas on every floor.
That obviously negates the affordability argument as those spaces are unrentable and must be filled with something (amenities, or maybe co-working spaces?) - there's no good answer to that in most large buildings.
That Bloomberg post up above from 2022 does present an interesting opportunity and it has even happened here in NYC, though generally only on the high end of the scale (tall slender office buildings from the pre-War* era being converted into luxury condos). However, that is extraordinarily expensive to do, and only lends itself well to the sorts of iconic buildings that are expensive as hell to snap up in the first place.
That brings me to the next problem, outlined in the second thread above, after this detour:
Detour: NYC Zoning Background
Older buildings like the two conversions linked just above tend to have fairly small floor plates** compared to the more modern post-war glass behemoths. This is where things get really interesting from an urban planning perspective, starting with the 1916 Zoning Resolution in NYC.
That 1916 resolution mandated that a certain amount of light be accessible to lower floors of buildings, leading to the iconic setbacks of pre-War architecture in NYC and this iconic study by Hugh Ferriss from The Metropolis of Tomorrow (1929) indicating the maximum mass permitted by the 1916 rules shown at the right.
With the exception of the very tip of Manhattan and big chunks of midtown and the East Side near midtown, this zoning resolution utterly defined the entire character of the city for 45 years. It continues to define the day-to-day experience of New Yorkers and visitors alike to this very day.
In 1961, the city passed new zoning rules implementating what is known as Floor Area Ratio (FAR), superseding the old 1916 rules.
FAR effectively changed the rules from setbacks based on height above the ground to a percentage of the overall footprint of the property. This allowed developers and architects a bit more flexibility in design while still ensuring an average amount of light to reach the lower levels of buildings (and hopefully the street, at least at certain times of day/year).
This (simplistically, at least) determines how much of the land the developer can cover and up to what height per portion of land. A developer can add public-private space on part of their property next to their actual building, allowing them to build a bit taller than if they had filled the entire lot (this is often desirable as tenants tend to like hight floors).
Where the FAR stuff gets interesting is when you get into the concept of “air rights”. This isn’t as common with office buildings, since as we’ll see in a bit, large floor plates are important to offices, but it is directly responsible for Billionaires’ Row on and around 57th St. Basically, developers can purchase the air above neighboring buildings that never met their FAR limits and then stacked them on top of one another to allow for far taller buildings than the FAR for their property along would permit.
Second issue, resumed:
So, when talking about more modern, but not so new, and thus less desirable buildings (think much of the late 70s through early 90s and in some cases up to 200, but in particular late 70s through the 80s), you’ve got a lot of building stuck that is under-occupied, mainly because it’s not particularly attractive (1980s architecture, anyone?), but also because almost none of it is really well-wired for modern business. Insufficient outlets, lack of internet connections (or jerry-rigged ones), etc.
Now add to that the fact that most of these buildings have fairly large floor plates all the way to the top. Bathrooms are centered around the core, wiring is doing through the floor (or worse, above the ceiling tiles to come down the sparse columns), etc. and you start to see the expense involved to retrofit and convert a building of this nature — it just isn’t practical.
In a city like New York, what typically happens is the building just gets bought at a relative bargain and demolished to be replaced with a gleaming new ultra-modern tower. If you’re lucky, someone can retrofit it for slightly-less bargain office space as is being done with a building on the northwest corner of Bryant Park.
To convert a building like that to housing, you have all the issues of wiring, plumbing (at volumes and usage patterns the buildings’ systems were never designed for), and new walls. You even have the question of how to retrofit localized heating, ventilation, and air conditioning per unit. Anyone who has ever worked in a large office building can attest to the nightment that is office HVAC and temperature control.
However, you also have one that almost never gets mentioned: housing by law is required to have access to daylight. This was a requirement born of the horrible tenements in NYC that helped give rise to the 1916 zoning reforms themselves. You simply cannot have units or even rooms within units (with the exception of bathrooms) without at least indirect access to daylight (in that case things like kitchens in more-or-less open floor plans). Bedrooms and main living spaces can’t be walled off from daylight.
What this means is that you can’t just fill the typical floor plates of a modern-ish office building with apartments and call it a day. You can’t have real living spaces extending to the core of the building. So what do you do with the space between the apartment doors and the elevator core? That’s effectively lost space.
Maybe you could put laundry rooms on every floor. Perhaps a few workspaces and meeting rooms for people working remotely? Maybe some open common space? There’s basically nothing you can really do there that’s revenue generating. While I’d like to think there was a way to retrofit older underutilized commercial buildings as housing, it really isn’t practical.
Any design that could really work within the law is likely to be prohibitively expensive and not sufficiently dense to generate anything like the amount of housing we really need. The simple truth is that a lot of these buildings are just going to have to be completely removed from the urban landscape and replaced with practical subsidized housing. That almost certainly will involve breaking up the large properties into smaller ones or building split towers on the same property. I just hope we do a better job of that than the last time this was done in bulk (see NYCHA’s “towers in the park”).
* In NYC, pre-war typically refers to anything pre-dating the construction hiatus in WWII, and post-War commonly refers to the rise of more modern and post-modern steel and glass buildings after the war.
** Floor plates are essentially the area of each floor through a given section of a building. For example, lower floors in the Chrysler Building of Empire State Building have larger floor plates than higher floors due to the setbacks used at the time.