{"id":26550,"date":"2023-05-18T12:35:21","date_gmt":"2023-05-18T19:35:21","guid":{"rendered":"https:\/\/occupysf.net\/?p=26550"},"modified":"2023-05-18T12:44:48","modified_gmt":"2023-05-18T19:44:48","slug":"myths-about-converting-offices-into-housing-and-what-can-really-revitalize-downtowns","status":"publish","type":"post","link":"https:\/\/occupysf.net\/index.php\/2023\/05\/18\/myths-about-converting-offices-into-housing-and-what-can-really-revitalize-downtowns\/","title":{"rendered":"Myths about converting offices into housing\u2014and what can really revitalize downtowns"},"content":{"rendered":"\n
\"\"<\/figure>\n\n\n\n

RESEARCH  REPORT<\/a> (brookings.edu)<\/p>\n\n\n\n

Tracy Hadden Loh<\/a>, Egon Terplan<\/a>, and DW Rowlands<\/a> Thursday, April 27, 2023<\/p>\n\n\n\n

After the September 11, 2001 terrorist attacks that destroyed the World Trade Center, many people wondered if Manhattan\u2019s Financial District\u2014a place that helped coin the American English word \u201cdowntown\u201d<\/a>\u2014could ever recover. Cities throughout the country also questioned whether dense, high-rise districts could be sustained. That same year, San Francisco was reeling from the dot-com collapse<\/a> as thousands of jobs disappeared, office vacancies climbed to over 20%<\/a>, and rents eventually fell by over 60%. But within a few years, office demand returned, and these central business districts refilled with workers and activity.[1]<\/sup><\/a><\/p>\n\n\n\n

\"Tracy<\/a><\/figure>\n\n\n\n

Tracy Hadden Loh<\/a><\/h2>\n\n\n\n

Fellow – Brookings Metro<\/a>, Anne T. and Robert M. Bass Center for Transformative Placemaking<\/a><\/h3>\n\n\n\n

lohplaces<\/a><\/p>\n\n\n\n

\"Egon<\/a><\/figure>\n\n\n\n

Egon Terplan<\/a><\/h2>\n\n\n\n

Senior Fellow – Institute of Transportation Studies at UC Berkeley <\/h3>\n\n\n\n

Robert S. Cornish Endowed Chair of Regional Planning – Department of City and Regional Planning at UC Berkeley<\/h3>\n\n\n\n

terplan<\/a><\/p>\n\n\n\n

\"DW<\/a><\/figure>\n\n\n\n

DW Rowlands<\/a><\/h2>\n\n\n\n

Research Assistant – Brookings Metro<\/a><\/h3>\n\n\n\n

82_Streetcar<\/a><\/p>\n\n\n\n

Today, many U.S. downtowns are facing a similar crisis in the wake of COVID-19. With the pandemic-induced shift to remote work and the slow return of office workers, the demand for downtown real estate\u2014particularly office space\u2014has plummeted. Office utilization averages less than 50%<\/a> across major U.S. downtowns. Vacancy rates are 27% in San Francisco<\/a> and over 16% in New York<\/a>, and increasing. The downtown business ecosystem is also threatened as many small businesses (such as restaurants) are struggling or closing due to lack of customers. Some urban transit systems have lost half their ridership and face a fiscal crisis.<\/a><\/p>\n\n\n\n

This is not the first time<\/a> cities have seen a glut of office vacancies. What is unprecedented is both the speed at which this glut has happened, and how it has occurred at a time of low unemployment and rising interest rates.<\/p>\n\n\n\n

Many are arguing that the conversion of vacant office space into housing<\/a> is a key strategy for addressing these challenges and revitalizing downtowns. Proponents of office-to-residential conversion note that since remote work is here to stay, office demand will never fully return to pre-pandemic levels, and the vacant office space can be repurposed into what cities currently need: housing. Moreover, they argue that the expense and complexity<\/a> of conversions justify public sector intervention and subsidy.<\/p>\n\n\n\n

This raises a fundamental question: To what extent are current high office vacancies a market problem whose burden falls on the private sector (property owners and investors) and to what extent do they represent a market failure and policy problem to which government must respond with financial support from the public?<\/p>\n\n\n\n

In this report, we argue that office-to-residential conversions are one potential remedy in some circumstances. But the public interest in conversion and the potential beneficiaries must be clearly defined in order to justify any public financial support. It is still early in the shift to hybrid work and many market forces (e.g., office buildings repricing to lower rents) have yet to play out. Governments rushing to provide financial support for conversions could inadvertently subsidize the wrong behavior. Office-to-residential conversions are not a panacea, but rather one tool in a much broader toolkit for downtown revitalization.<\/p>\n\n\n\n

This report begins by identifying the five common arguments made by proponents for converting offices into housing. It then evaluates the myths and realities of each argument, using data from cities across the United States. It concludes with six recommendations for what cities should do about conversions and what other long-term strategies they could adopt.<\/p>\n\n\n\n

COMMON ARGUMENTS FOR CONVERTING OFFICES INTO HOUSING<\/h2>\n\n\n\n

The conventional wisdom<\/a> is that since a high percentage of office workers will continue to work remotely, and downtowns and office buildings are bereft of people, converting empty or near-empty office buildings into housing will add needed foot traffic and breathe new life into downtown and cities.<\/p>\n\n\n\n

The common arguments go as follows:<\/p>\n\n\n\n