With a higher-than-normal office vacancy rate as 2021 nears to a close, what can be done with these empty offices?
A booming housing demand and lack of inventory has pushed the housing market to one of the fastest-moving, most expensive markets ever. Can these vacant commercial buildings turn into housing units? According to rent.com, 17.2% of office buildings were vacant in the second quarter of 2021, the most recent data available. Both Pittsburgh and Philadelphia have slightly more than 15% office vacancy rates, according to the latest Cushman & Wakefield MarketBeat report. The pandemic left 137 million feet of office space available at the end of 2020, an increase of 40% from the end of 2019. However, office rents have gone up 0.9% over the previous quarter, despite lower demand.
While turning empty offices into housing sounds like a win-win situation, there are some hurdles in the way. If a building is zoned as strictly commercial, it needs to be rezoned as mixed use or strictly residential, which could be a costly and timely procedure. Additionally, transforming offices into housing is a tricky endeavor, in addition to dividing up office space into suitable living arrangements, there is typically more remodeling needed to make an office space livable. Is the cost worth it?
“It almost takes the stars to align,” said Strachan Forgan, an architect to NBC News. “It’s a unique set of circumstances that makes sense. So that’s why it is relatively rare.”
Pre-pandemic, office space in downtown Harrisburg was renovated to construct 51 apartments available to residents to rent. However, the project required acquiring three buildings and cost $9 million.