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Converting Your Space

By: Rachel Antman


“Hybrid work is here to stay,” states a recent report from McKinsey Global Institute. The report notes that office attendance remains 30 % lower than it was before the pandemic, and that according to a “moderate scenario,” demand for office and retail space will be 13% lower in 2030 than in 2019.

Given forecasts like these, it’s little wonder that some office landlords are thinking about repurposing their space. Such decisions are hardly straightforward, however. Here’s what experts say about the possibilities and pitfalls of adaptive reuse:


In late October, the Biden administration announced a host of measures, including several financial incentives, to encourage owners to convert their buildings into multifamily residences. Some people believe these conversions can help address critical housing shortages, but caveats abound.

“The time to convert is a lengthy process, which includes rezoning, re-designing, and re-building,” warns R. Craig Coppola, SIOR, the Phoenix-based founding principal of Lee & Associates Arizona, in a recent article about office conversion. “Additionally, these conversions are expensive because you are taking the office and breaking it down to the shell to rebuild.”

Tripp Guin, SIOR, broker in charge at Tripp Commercial in Charlotte, N.C., recounts the experience of a friend who was trying to determine whether an office building with approximately 800,000 feet of vacant space could be converted into residential. Unfortunately, the floor plates made that prospect cost prohibitive. Guin expects, therefore, that the building will be demolished rather than reused.

As agricultural technology continues to improve, vertical farming could be key to repurpose empty office buildings around the country.

Office-to-residential conversions can work if buildings meet certain criteria, e.g., smaller floor plates. Coppola points to two successful projects: one in Bethesda, Maryland, and the other in the Phoenix area. Multiple conversions have been completed or are underway in the Financial District of New York City, reports the New York Times. Adam Kaduce, SIOR, president of R&R Real Estate Advisors in Des Moines, Iowa, says that several office-to-residential projects have been proposed or are in progress in that city’s downtown area.

The trend extends overseas. Krystyna Rawicz, affiliate member with SIOR, managing director of KRA Visionary Project Partners in Kilcoole, Ireland, reports that some offices in the country are being converted into residential, although the timeframe is long because of planning restrictions, fire safety, and other regulatory issues.


If conversions to multifamily seem daunting, owners may want to consider other options, one of which is industrial. The concept is quickly gaining popularity, thanks to the strength of the industrial market. Indeed, a recent headline in the Commercial Observer announced: “The Office-to-Industrial Conversion Trend Is Here.”

Nora Hogan, SIOR, principal of Transwestern Commercial Services in Dallas, is involved in the conversion of an 86,000-square-foot building in Richardson, Texas. The building, which was once used for call center and lab purposes, is being converted into a facility for warehousing and light manufacturing. She suggests that owners interested in following this model “should evaluate the cost to demolish a property and rebuild versus the cost of conversion,” and that they engage city and economic development groups, which can smooth the way toward zoning approvals and perhaps even provide economic incentives.

Hogan recommends that analyses include demand in the immediate area for warehouse distribution/light manufacturing, types of neighboring tenants, local zoning, potential truck routes, proximity to a highway, ceiling heights, bay depths, column placement, the labor pool, the feasibility of creating a functional truck court, and existing infrastructure (power, water and sewer capacity, telecommunications, and fiber lines).

Although the office-to-industrial conversion trend is “still relatively niche,” in the words of Newmark’s director of research Liz Berthelette, she points out that “overall, industrial is one of the most desirable real estate classes, and demand has held on when compared to other asset classes.” So, watch this space.


Life sciences, another sector that is performing well, is also a potential target for conversions. Although lab buildings have specific requirements for loading, power, and utility infrastructure, Cushman & Wakefield’s Project & Development Services team says that such conversions are more attainable than one might expect.

Universities may be good fits for empty downtown spaces, says Michael Kimmelman of the New York Times, noting Johns Hopkins’ use of the former Newseum building in Washington, D.C. and other examples in Los Angeles, Louisville, and San Francisco.

Some experts maintain confidence that the office market will rebound, although layouts may change along with tenant expectations. 
Conversions of empty space into vertical farms show early promise. Andy Mukolo of Barchart suggests that “as agricultural technology continues to improve, vertical farming could be key to repurpose empty office buildings around the country.” According to an article in Modern Farmer, vertical farms offer environmental benefits from using less water and energy than traditional farming, and often can make use of existing office HVAC systems.


Some experts maintain confidence that the office market will rebound, although layouts may change along with tenant expectations. In Iowa, Kaduce is seeing single-tenant buildings ill-suited to conversions become multi-tenant buildings. He is working on one: the conversion of a former Wells Fargo facility. To attract tenants, the team is adding a full suite of modern amenities, including state-of-the-art conference facilities, a training center for 200, a fitness center, a collaborative café with a Starbucks kiosk and game tables, a video wall, and greenspace for outdoor work and sports.

Layouts are changing, too. Raffaella Cassese, SIOR, office specialist at Target RE in Milan, Italy, says that developers are focusing on more common and meeting areas, bigger kitchens in the middle of the office where informal meetings can take place, and more hot desks. Guin believes that updated office environments will offer “a coffee shop feel” with conferencing and hoteling facilities.


Double down on the space, repurpose, or demolish? Brokers are ideally positioned to advise owners and developers on the best options based on feasibility, costs, zoning, futureproofing, and even sustainability: As Rawicz notes, repurposing requires less use of carbon and resources than new builds.

Cassese views changes in the market as opportunities and recommends that brokers “ride the wave.” “There will be buildings that are bought and sold, and conversions will be a serious consideration,” says Kaduce. “These transactions and redevelopments will require the expertise of brokers, and the best of the best are the SIOR brokers. They will be well-suited to advise on local market fundamentals and have access to a national network of professionals to help a re-use be successful.”




Media Contact
Alexis Fermanis SIOR Director of Communications
Rachel Antman
Rachel Antman
Saygency, LLC

Rachel Antman is a writer, public relations consultant, and founder of Saygency,  LLC.