More than 1.2 billion sf of U.S. office space—14.8% of the nation’s total—have strong potential for conversion to residential use, according to real estate software and services firm Yardi.
Yardi’s new Conversion Feasibility Index scores office buildings on their suitability for multifamily conversion. Building scores are based on multiple factors, including building age, location, total square footage, building depth, mid-block location, use type, number of stories, floor plate shape, ceiling height, green-building certifications, walkability, and transit accessibility. Buildings’ scores are then categorized into three tiers, with Tier 1 being the most suitable to conversion.
Although the pool of potential conversions is large, many projects may have a tough time penciling out, Yardi says. To address that issue, local governments have implemented incentive plans for owners.
For example, New York City’s Office Conversion Accelerator, which expedites zoning and permitting processes, has enrolled dozens of buildings so far. Washington, D.C.’s Office-to-Anything Program offers a 15-year tax freeze for eligible projects. Chicago has offered generous subsidies to convert downtown offices into over 1,000 apartments.
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