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Two Considerations When Converting Office to Residential

Sep 27, 2023

With shifting dynamics, demographics, and need for more housing, the conversion of office buildings to residential housing has evolved into 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, along with 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 (subpaneling to each individual unit)
  • HVAC
  • Lighting (window size, placement, and limitations of natural light)
  • Sound insulation
  • Fire alarms/sprinkler systems

In an effort to identify buildings that are better suited for conversion, architecture firm Gensler has developed an algorithm to help measure and evaluate 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, as 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

Structural integrity of the building aside, an office building location often presents legal and zoning issues when considering significant transformation.

Cities like New York have complicated zoning and building codes, with special regulations applying for buildings built before certain dates, and for particular areas of the city. Additionally, there are numerous city-wide governance factors to consider, such as the state’s Multiple Dwelling Unit Law, along with various light and air requirements for residential housing.

In an attempt 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 process for qualification. The proposal would offer the opportunity to convert an estimated additional 136 million square feet of office space. The proposal will enter the formal review process in September 2024.

The Future of Office-to-Residential Conversions

As office occupancy continues to struggle and the need for more housing continues to grow, 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 is becoming more manageable.

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William Van Aken

William Van Aken is responsible for all phases of the audit process, including planning, organization, supervision, and review of financial statement and other assurance related services.

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