What would it take to convert more offices into apartments?

In Chicago, Michael M. Edwards, head of the Chicago Loop Alliance, a business organization, is seeing a faltering return to downtown offices. In the spring of 2020, he returned to his own office and recalled riding his bike down the street past boarded-up buildings and empty skyscrapers. As he caught the train, he noticed the silence, the absence of all the businessmen in suits who used to commute alongside him.

Mr. Edwards is excited about a plan the city has begun developing that would use office conversions to create 1,000 housing units, 30 percent of which are affordable, along LaSalle Street, a major commercial street. As more people live downtown, Mr. Edwards argues that more people could easily commute to downtown jobs.

He notes that this push to bring more housing downtown is part of a recent trend: Around 40,000 people live in downtown Loop, up from just about 13,000 a decade ago. Apartments in the Loop are renting at higher prices than before the pandemic, suggesting people are interested in living in this downtown hubbub.

“You’re in the middle of everything,” said Mr. Edwards, who used to live in the Loop. “It’s a 10-minute walk to work, so suddenly you have a two-hour commute back.”

In New York, too, some property owners are calling for more vigorous talks about home renovations. They’re noting that companies are increasingly looking for new offices with luxurious amenities — Class A spaces — in what real estate firms refer to as an “escape to quality.” This leaves millions of square feet of lower-class spaces, often built before the 1980s, that are likely to sit vacant.

“Some of these buildings are becoming ghost buildings,” said Bill Rudin, whose family business owns and operates commercial and residential properties. “The market is telling all of us that we need to do something different that is imaginative, ready to go, but has proven to be successful.”

Lower Manhattan provides a model for the possibilities of transforming a business district into a residential one. Facing financial difficulties in the early 1990s, New York State passed a tax break program called 421-g that encouraged the conversion of old offices into apartments. As a result, between 1995 and 2006 nearly 13 million square feet, or 13 percent, of Lower Manhattan’s office real estate was converted to housing.

Leave a Reply

Your email address will not be published. Required fields are marked *