Share: Share on Facebook Share on Twitter Share on LinkedIn I recommend visiting cushmanwakefield.com to read:%0A%0A {0} %0A%0A {1}
offices-to-multifamily-hero-mobile offices-to-multifamily-hero

Insights

​​Converting Offices to Housing: What You Need to Know​

As building owners and potential investors explore what to do with empty commercial real estate space, many consider converting office buildings into multifamily uses. 

By the end of the decade, we could see a surplus of 330 million square feet (msf) of vacant office space, most of which hasn’t kept pace with modern space use and trends. At the same time, the U.S. faces a housing shortage, with estimates ranging from 1 to 6 million units in supply-vs.-demand discrepancies. As building owners and potential investors explore what to do with empty commercial real estate space, many consider converting office buildings into multifamily uses.

But an office-to-multifamily conversion can be a complicated and costly process and includes many considerations—from building infrastructure, to zoning, to local market demand, and more. It’s not a quick process—construction can take 8 to 16 months—however, initial evaluations to help determine whether to proceed can be done quickly if owners have the right partners.

Cushman & Wakefield’s Project & Development Services (PDS) team has a streamlined process for owners and investors to inexpensively evaluate and quickly decide if a building should be further explored for a full conversion. Our firm has spent significant resources evaluating conversion opportunities and can estimate cost, time, risks and likely returns.

STEPS FOR CONVERSION EXPLORATION—OFFICE TO MULTIFAMILY

Step One: Conversion Exploration

Cushman & Wakefield research teams can look at local markets to see where there is both an unmet demand for housing and office buildings with high vacancy, and then develop a plan to convert from office to multifamily for owners or potential new owners. Identifying a building to convert may happen a few ways—existing building owners can identify buildings that are challenging to lease, lenders and banks may take control of a distressed or stressed asset and want to explore other options.

Step Two: Market Analysis

Drawing on our market intelligence and capital markets research, we determine which locations, markets and submarkets have high demand for multifamily housing. We explore the types of space that are in demand—affordable or senior housing, for example—to further vet identified properties and ensure that there is sufficient demand to lease multifamily units. 

Step Three: Validation/Conversion Strategy

Once we identify potential conversion properties, we determine the opportunity using a low-cost scorecard tool that looks across site characteristics, including walkability, neighborhood, safety and government incentives. We also evaluate the building’s physical characteristics and technical feasibility of conversion.

Factors we consider:

office-to-multifamily-building-graphic

After analyzing these components at a high level, we can advise if a conversion would be a sound investment in a short period of time, at little expense.

Step Four: Due Diligence

At the due diligence stage, it’s time to involve an architect, planner and engineers.

We begin to develop concept plans for the building:

  • How many units will the building yield?
  • What is the mix of one-, two- and three-bedroom units?
  • How will the asset be positioned in the market?
  • What physical characteristics will require investment? (e.g., window replacement, plumbing and electrical upgrades, etc.)
  • Is there adequate residential parking?
  • Do the ceiling heights work?
  • Do the mechanical, electrical and plumbing systems work for a residential conversion?
  • Are there enough elevators and are they well-located?

This last step can often take a few months, and generally requires an initial investment to assemble the conversion team. But if involved early, Cushman & Wakefield can provide owners with confidence to know whether to proceed with an office-to-multifamily conversion.

 

Cushman & Wakefield is a partner for CRE owners and investors to identify and execute on the best uses for their assets. If assets can be converted into multifamily housing, we may help to solve the nation’s housing shortage, reduce vacant, unneeded spaces, and help improve our local cities and communities.

 

Authors

Gary Helminski
Gary Helminski

Executive Managing Director
Washington, United States


+1 (202) 266-1157

Download VCard

Adrian Conforti Washington DC
Adrian Conforti

Sr. Managing Director, Project & Development Services
Tysons Corner, United States


+1 (703) 770-3447

Download VCard

Asif Virani
Asif Virani

Sr. Director, Project & Development Services
Washington, United States


+1 (202) 495-7027

Download VCard

Related Insights

LifeSciences-Checklist_card
Article

Does your building qualify for a life sciences conversion?

Interest in converting assets for life sciences use is growing amongst building owners. Cushman & Wakefield’s Project & Development Services team developed basic building performance criteria based on the minimum standards that life sciences companies typically require. 
Eric Giles • 7/18/2023
chicago skyline above the clouds
Research • Investment / Capital Markets

Glide Path Report

Our Report provides a synthesized view of the key themes and questions permeating the U.S. capital markets landscape.
Abby Corbett • 6/29/2023
contextualizing-development-risk-web-card
Article

​​Contextualizing Development Risk​

The U.S. multifamily market is in the midst of the largest supply wave in modern history. But construction timelines are longer than ever, meaning the market has more time to absorb these deliveries. With supply risk distributed across the U.S., overbuilding is just a much a function of demand as it is supply. 
Sam Tenenbaum • 3/24/2023
obsolescence-webcard
Insights • Workplace

Obsolescence Equals Opportunity

Much has been written about the potential death of the office, with justifiable concern that some office properties may never again be fit for their original purpose. Running counter to the doomsday narrative is Cushman & Wakefield’s new publication, Obsolescence Equals Opportunity. In it, we offer a perspective focused on the upside potential for owners who are able to meet the market’s call to action. 
Kevin Thorpe • 2/22/2023

Related Services

Project & Development Services
Your real estate decisions go beyond space, cost and schedule. Our team will supply the expertise and data for effective decision-making and provide the best and most effective construction project delivery.
Learn More
Multifamily
Our Multifamily advisors help supercharge your portfolio, beyond the typical “where, why, and how” of investing in and managing multi-unit properties.
Learn More
Capital Markets

Our Capital Markets experts are driven by the simple ethos: life is what we make it. That’s why we make more deals by accessing more investors, creating more connections and providing exclusive, local insights. We relentlessly make opportunities for our clients. Every day. All over the world.

Learn More

Interested in learning more?

Get in touch and we can assist with any additional information you need.

With your permission we and our partners would like to use cookies in order to access and record information and process personal data, such as unique identifiers and standard information sent by a device to ensure our website performs as expected, to develop and improve our products, and for advertising and insight purposes.

Alternatively click on More Options and select your preferences before providing or refusing consent. Some processing of your personal data may not require your consent, but you have a right to object to such processing.

You can change your preferences at any time by returning to this site or clicking on  Cookies

More Options
Agree and Close
These cookies ensure that our website performs as expected,for example website traffic load is balanced across our servers to prevent our website from crashing during particularly high usage.
These cookies allow our website to remember choices you make (such as your user name, language or the region you are in) and provide enhanced features. These cookies do not gather any information about you that could be used for advertising or remember where you have been on the internet.
These cookies allow us to work with our marketing partners to understand which ads or links you have clicked on before arriving on our website or to help us make our advertising more relevant to you.
Agree All
Reject All
SAVE SETTINGS