Office-to-residential conversion
By: J. David Chapman/March 2, 2023
The COVID-19 pandemic, and our response, reshaped our lives in many ways. The way we work has certainly been changed. Many of us are working from home with no intention of ever returning to the workplace. Many of the longer-term leases are just now up for renewal and many companies have been patient and slow to see how the office-life world would indeed change. One thing is perfectly clear at this point: The demand for office space has decreased, and many commercial real estate owners are looking for new ways to repurpose their properties after leases have not been renewed or less space has been leased.
Converting office space into residential properties has become an increasingly popular option, as it allows property owners to take advantage of the growing demand for housing while also providing a unique living experience for tenants. However, the process of converting an office space into a residential property is not without its challenges.
One of the main challenges of converting office space into residential properties is the need to comply with building codes and zoning laws. Office buildings typically are designed for commercial use and may not meet the requirements for residential properties, such as minimum ceiling heights, ventilation, proper egress, and natural light.
Another challenge is the cost of renovations. Converting an office space into a residential property likely will require significant renovations, including the installation of kitchens, bathrooms and other amenities. Property owners will need to budget for these expenses, which can add up quickly.
Despite these challenges, there are several benefits to converting office space into residential properties. For one, it allows property owners to tap into the growing demand for housing in urban areas. As more people move into cities, the demand for housing has skyrocketed, leading to a shortage of affordable properties.
Converting office space into residential properties also can provide a unique living experience for tenants. Many former office buildings offer large, open spaces with unique architectural features that can be transformed into modern and stylish living spaces. These properties can appeal to tenants who are looking for something different from the typical apartment or condo.
Finally, converting office space into residential properties can be a smart financial move for property owners. While office space may be experiencing a decline in demand, the demand for housing is only increasing.
J. David Chapman is professor of finance and real estate at the University of Central Oklahoma (jchapman7@uco.edu).