About 11% of U.S. office buildings could be suitable for green office-to-residential conversions

A National Bureau of Economic Research working paper from researchers at New York University and Columbia Business School indicates that about 11% of U.S. office buildings may be suitable for conversion to green multifamily properties.

According to a report at Globe St., the researchers created “a set of criteria to identify commercial office properties that are physically suitable for conversion.” The paper also discusses “several policy levers available to federal, state, and local governments that could accelerate the conversion.”

The researchers identified candidates for conversion according to the following criteria:

Locations in a city with the strongest negative valuation pressures and with strong transportation options
Buildings constructed before 1990 that tend to be cheaper, have smaller floor plates, and are more charming, increasing conversion appeal
Class A, B, and C buildings that are underused
Buildings at least 25,000 sf in size to ensure enough economies of scale
Buildings with a distance from windows to core of more than 60 feet were excluded
Eliminated buildings with no or few long-term leases left

The researchers showed an example pro-forma for a 212,500 sf office building that would result in post-conversion rent of $8 per square foot as compared to a $3.50 post-pandemic rent if the property remained as an office building.

The Harvard studies on the unintended effects of open office defines it as space where 'one entire floor was open, transparent and boundaryless… [with] assigned seats,' and the other had 'similarly assigned seats in an open office design, with large rooms of desks and monitors and no dividers between people's desks.'