How Cities Can Spur the Conversion of Offices into Greener Apartments.
By Arpit Gupta
Buzz is building around converting offices into apartment buildings — and for good reason. These conversions can play a part in addressing three pressing urban challenges: a lack of housing, an oversupply of office space and the imperative to reduce greenhouse gas emissions.
It’s time for cities to rethink how they use space, as the demand for commercial office space is expected to remain weak. Office cash flows declined by 17.4 percentage points nationwide between the end of 2019 and the end of 2022, and vacancy rates hit 40-year highs in many cities. Vacant offices threaten the vitality of cities too, as they come with negative externalities — in terms of foot traffic, retail sales, financial sector fragility, tax revenues and public goods and services — which risk triggering an urban doom loop.
At the same time, the U.S. housing crisis continues to strain households. The average renter spends at least 30% of their income on rent. Cities lack the appropriate supply of housing, especially affordable housing, to meet the challenge.
Read the full Next City article.
Arpit Gupta is Associate Professor of Finance.