Two Considerations When Converting Office to Residential Housing
- Published
- Aug 7, 2024
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With shifting dynamics, demographics, and the need for more housing, converting office buildings into residential housing has become a compelling solution.
However, this type of retrofitting can present significant challenges. Below, we explore two key challenges to consider when converting office buildings to residential housing and offer solutions to ease these obstacles.
Structural Challenges in Office-to-Residential Conversions
While the core structural integrity of an office building selected for conversion to residential housing may remain intact, the interior of the building will likely need significant remodeling and construction to achieve a successful conversion. Key items to consider include:
- Plumbing (centralized plumbing converted into in-unit)
- Electrical (sub-paneling to each unit)
- HVAC
- Lighting (window size, placement, and limitations of natural light)
- Sound insulation
- Fire alarms/sprinkler systems
Identifying Suitable Buildings for Conversions
To identify buildings better suited for conversion, architecture firm Gensler has developed an algorithm to help measure and evaluate the physical assets of an office space to see and rank the viability of a transformation.
Identifying the buildings best suited for conversion before making any decisions is important to save time and costs. Typically, only three out of ten are classified as a good fit. An efficient method can expedite this decision within hours rather than days or weeks.
Navigating Legal and Zoning Challenges in Office-to-Residential Conversions
Leaving the structural integrity of the building aside, an office building's location often presents legal and zoning issues when considering significant transformation.
Understanding Local Regulations and Governance
Cities like New York have complicated zoning and building codes, with special regulations that apply to buildings built before specific dates and for specific areas of the city. Additionally, numerous city-wide governance factors, such as the state’s Multiple Dwelling Unit Law and various light and air requirements for residential housing, must be considered.
To expedite the often-complex office-to-residential process, New York City Mayor Eric Adams and the New York City Department of City Planning announced the City of Yes plan, a proposal to modernize City zoning rules.
The three initiatives outlined under the plan, the “City of Yes Housing Opportunity,” the “Midtown South Mixed-Use Plan,” and the “Office Conversion Accelerator,” all focus on zoning changes to allow more office buildings to qualify for conversion and a streamlined qualification process. The proposal would offer the opportunity to convert an estimated 136 million square feet of office space. The proposal will enter the formal review process in September 2024.
Additionally, in the second quarter of 2024, New York State Real Property Tax Law 467-m was adopted by the state legislature to provide real property tax exemptions for the conversions of non-residential buildings, where the Eligible Conversions commenced after December 31, 2022, and on or before June 30, 2031, and where the Eligible Conversions are completed on or before December 31, 2039. Eligible Multiple Dwellings must be operated as rental housing, with other restrictions for affordable housing and building service employee requirements.
The Future of Office-to-Residential Conversions
As office occupancy continues to struggle and the need for more housing grows, interest in converting office space to housing will keep gaining momentum. Despite significant challenges on these projects, the ability to identify and secure approval for conversion while reaping financial incentives is becoming more manageable and attainable.
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