Office-to-Residential Conversions Feasibility Quiz
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Questions and Answers

What was the biggest conversation in the new development space in New York City in the first half of 2023?

  • The expansion of WeWork locations
  • The feasibility of office-to-residential conversions (correct)
  • The need for more commercial office spaces
  • The demand for luxury condominiums

    • What prompted the Biden administration to announce an initiative to incentivize the conversion of empty office buildings into housing?

  • High number of empty office buildings and low residential inventory (correct)
  • WeWork's expansion plans
  • Rising demand for commercial office spaces
  • Increase in luxury condominium sales

    • What did WeWork's bankruptcy filing result in?

  • Expanding their office locations worldwide
  • Exiting 40 locations in New York City alone (correct)
  • Launching a new residential division
  • Acquiring new office spaces in Manhattan

    • What is the focus of the majority of business for the research and advisory division launched in 2020?

    <p>Analyzing office-to-residential opportunities in Manhattan and the boroughs</p> Signup and view all the answers

    What is considered an essential step in residential pre-development planning?

    <p>Walking the building and putting pen to paper</p> Signup and view all the answers

    Why are corner properties generally better candidates for conversions?

    <p>They have more exterior wall and windows per floor plate dimensions</p> Signup and view all the answers

    What is a potential challenge of older office buildings with unique fenestration?

    <p>Creating unconventional residential spaces</p> Signup and view all the answers

    What is an important consideration when laying out residential apartments in conversions?

    <p>Moving the elevator core to achieve the ideal unit mix</p> Signup and view all the answers

    Why are column locations an important factor in conversion studies?

    <p>They impact the attainability of the most desirable unit mix</p> Signup and view all the answers

    What can deep office floor plates potentially create in conversions?

    <p>Potentially unusable or less valuable space</p> Signup and view all the answers

    What are some details commonly found in older office buildings but not typically budgeted for in new construction?

    <p>Detailed windows with intricate jambs, headers, and sills</p> Signup and view all the answers

    What is an advantage of conversions with details covetable in new construction?

    <p>They save resources and energy</p> Signup and view all the answers

    What is the role of tax incentives in conversion projects?

    <p>To make these projects more economically viable</p> Signup and view all the answers

    What is the potential impact of moving the elevator core in a conversion project?

    <p>It can be very costly and cause the project to not be financially viable</p> Signup and view all the answers

    What do conversions with traditional architecture provide opportunities for?

    <p>Developing designs responsive to historical context</p> Signup and view all the answers

    What is the role of foresight and planning in conversion projects?

    <p>To ensure immense benefits to the city and neighbors</p> Signup and view all the answers

    What is the current situation of office space in Manhattan?

    <p>94,000,000ft² of empty office space, an all-time record</p> Signup and view all the answers

    What is the proposed solution for the empty office space in downtown areas?

    <p>Easier conversion of unused office space to housing</p> Signup and view all the answers

    What is a potential challenge in converting office buildings into housing?

    <p>Not every office building makes for a great conversion</p> Signup and view all the answers

    What are some big cities looking at in relation to building conversions?

    <p>Incentives for developers who convert buildings into housing</p> Signup and view all the answers

    What is the number one issue in New York according to the text?

    <p>Zoning</p> Signup and view all the answers

    What is the focus of the U.S. initiative to incentivize the conversion of empty office buildings into housing?

    <p>Creating more affordable housing</p> Signup and view all the answers

    What is a potential challenge of older office buildings with unique fenestration?

    <p>Lack of natural light</p> Signup and view all the answers

    What does the ten year tax abatement in Philadelphia primarily aim to achieve?

    <p>Promoting property renovation</p> Signup and view all the answers

    What is the potential impact of moving the elevator core in a conversion project?

    <p>Optimized space utilization</p> Signup and view all the answers

    What is the main purpose of the U.S. initiative to incentivize the conversion of empty office buildings into housing?

    <p>Addressing housing shortages</p> Signup and view all the answers

    What is the role of tax incentives in conversion projects according to the text?

    <p>Promoting property renovation</p> Signup and view all the answers

    What is the primary impact of the ten year tax abatement in Philadelphia?

    <p>Encouraging property renovation</p> Signup and view all the answers

    What is the main concern highlighted by critics of certain policies according to the text?

    <p>Unnecessary developer handouts</p> Signup and view all the answers

    What is the primary reason for the U.S. needing more market rate homes at affordable price points?

    <p>Addressing the needs of extremely low-income renters</p> Signup and view all the answers

    What is the main focus of the additional supply in expensive major cities according to supporters?

    <p>Calming the housing markets</p> Signup and view all the answers

    What is the primary concern regarding the scale of the housing problem according to the text?

    <p>Insufficient government resources</p> Signup and view all the answers

    Which cities are leading the office conversion trend?

    <p>Washington, D.C. and Philadelphia</p> Signup and view all the answers

    What technique do builders use to convert buildings into apartments?

    <p>Remassing</p> Signup and view all the answers

    What is the typical household income allowing for rent in Philadelphia?

    <p>$1,300</p> Signup and view all the answers

    What is a challenge for developers in office conversions?

    <p>Physical layout and floor plates</p> Signup and view all the answers

    What is the occupancy status crucial for in office conversions?

    <p>Conversion</p> Signup and view all the answers

    What are the typical U.S. office buildings like in comparison to those suitable for conversion?

    <p>Newer and bigger</p> Signup and view all the answers

    What is the impact of office vacancies on government finances in New York City?

    <p>Roughly $6 billion in taxes</p> Signup and view all the answers

    What is the focus of the Post Brothers' portfolio?

    <p>Mid-Atlantic buildings</p> Signup and view all the answers

    What is the rental range for units at The Atlantic in Philadelphia?

    <p>$3,000 to $6,000 a month</p> Signup and view all the answers

    Why are older buildings considered better for conversions?

    <p>They make better conversions</p> Signup and view all the answers

    What is the role of access to light and air in office conversions?

    <p>Requiring creative redevelopment</p> Signup and view all the answers

    What is the typical rent for single bedrooms at the Poplar in Philadelphia?

    <p>$2,000 a month</p> Signup and view all the answers

    What is the primary focus of the U.S. initiative to incentivize the conversion of empty office buildings into housing?

    <p>Addressing office vacancies and creating more housing options</p> Signup and view all the answers

    What is a potential challenge for developers in office conversions?

    <p>Adapting to unique fenestration and floor plate layouts</p> Signup and view all the answers

    What is the role of foresight and planning in conversion projects?

    <p>Anticipating potential structural challenges</p> Signup and view all the answers

    What percentage of households report working from home more frequently now than before the pandemic?

    <p>35%</p> Signup and view all the answers

    By how much did workers' office attendance reduce from pre-pandemic norms?

    <p>30%</p> Signup and view all the answers

    In which quarter of 2023 did commercial real estate investment volumes fall by 64% year-over-year?

    <p>Q2</p> Signup and view all the answers

    What is the current office vacancy rate as per the text?

    <p>18.2%</p> Signup and view all the answers

    What percentage of renters are spending more than 30% of their income on housing?

    <p>45%</p> Signup and view all the answers

    What is the estimated number of suitable residential units that can be added through commercial-to-residential conversions?

    <p>171,470</p> Signup and view all the answers

    What is the current rental vacancy rate in the U.S. housing market?

    <p>6.3%</p> Signup and view all the answers

    What is the estimated shortage of housing units in the U.S. housing market?

    <p>3.8 million</p> Signup and view all the answers

    What is the potential impact of the COVID-19 pandemic on office space demand?

    <p>Decrease in demand for office space</p> Signup and view all the answers

    What is the main focus of the Biden-Harris Administration's aim to facilitate commercial-to-residential conversions?

    <p>Environmental sustainability</p> Signup and view all the answers

    What is the potential impact of converting commercial real estate to housing compared to new construction?

    <p>Faster completion and lower costs</p> Signup and view all the answers

    What existing federal programs support commercial-to-residential conversions?

    <p>Community Development Block Grant and Historic Tax Credit</p> Signup and view all the answers

    What is the estimated increase in lending capacity for development projects due to DOT policies?

    <p>$35 billion</p> Signup and view all the answers

    What is the expected trend for new opportunities of commercial-to-residential conversions?

    <p>Increasing trend</p> Signup and view all the answers

    What is the primary reason for the long-term shift in office space demand?

    <p>Remote work trends</p> Signup and view all the answers

    What is the potential impact of commercial-to-residential conversions on climate change?

    <p>Reduction in carbon emissions</p> Signup and view all the answers

    Study Notes

    Office Conversions into Apartments: Trends and Challenges

    • Office conversion trend is heating up in a small group of cities, led by Washington, D.C. and Philadelphia
    • The Poplar Building in Philadelphia, built 100 years ago as offices and manufacturing space, is one of several conversions conducted by the Post Brothers
    • Converting offices into apartments involves complex physical considerations, such as access to light and air, requiring creative redevelopment
    • Builders use a technique called remassing, with different levels of intensity, to convert buildings into apartments
    • Converted apartments tend to be pricey, addressing only a fraction of the housing need in hot markets like Denver or San Francisco
    • In Philadelphia, typical household income allows for $1,300 in rent, while at the Poplar, single bedrooms rent for $2,000 a month, and at The Atlantic, units can rent for $3,000 to $6,000 a month
    • The Post Brothers' portfolio includes 12 buildings in the mid-Atlantic with plans for expansion, maintaining high occupancy rates
    • Office vacancy rates are historically high, with New York at 12-13%, leading to challenges for investors and affecting government finances
    • The occupancy status is crucial for conversion, with older buildings making better conversions, but the typical U.S. office is newer, bigger, and not vacant enough for conversion
    • Office vacancies have implications for government finances, with New York City offices generating roughly $6 billion in taxes each year
    • New York has previously experimented with office conversions, and there is a need to think bigger about how to build more housing to address the housing need
    • Challenges for developers include the physical layout, floor plates, and systems, as well as the need for a clear path to emptying out office tenants before conversion can take place

    Commercial-to-Residential Conversions in the U.S. Housing Market

    • The U.S. housing market suffers from a shortage of 3.8 million housing units.
    • Rental vacancy rates are at a historic low of 6.3%, and 45% of renters are spending more than 30% of their income on housing.
    • Conversions of commercial properties to residential units can help combat climate change by reducing carbon emissions.
    • Past examples in New York, Los Angeles, and Philadelphia have successfully revitalized areas through commercial-to-residential conversions.
    • Converting commercial real estate to housing presents physical and financial complexities.
    • Despite the challenges, 15% of commercial district office buildings in major U.S. cities are suitable for residential conversion, potentially adding 171,470 units.
    • Conversions can be completed more quickly and at lower costs compared to new construction.
    • The COVID-19 pandemic has led to a long-term shift in office space demand, making commercial-to-residential conversions more viable.
    • The Biden-Harris Administration aims to facilitate commercial-to-residential conversions through federal programs and new actions.
    • Existing federal programs like the Community Development Block Grant and Historic Tax Credit already support commercial-to-residential conversions.
    • DOT policies have unlocked $35 billion in lending capacity for development projects, making conversions easier to finance.
    • New opportunities for commercial-to-residential conversions are expected to continue arising in the future.

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    Description

    Take the "Office-to-Residential Conversions Feasibility Quiz" to test your knowledge on the potential of converting underutilized office spaces into residential units in New York City. Explore the factors driving this trend, such as office occupancy rates, housing demand, and affordable housing needs.

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