Conversions like that are a lot like the evergreen concept of shipping container homes. They sound great on the surface, but they fail when you dig into the details. Unfortunately,...
Exemplary
Conversions like that are a lot like the evergreen concept of shipping container homes. They sound great on the surface, but they fail when you dig into the details.
Unfortunately, office-to-residential conversions rarely make sense, at least with any building built after the introduction of air conditioning. Residential units need windows for ventilation and emergency egress. In offices built before air conditioning, the floor plates were smaller, as individual office spaces needed to allow for natural ventilation. Buildings with larger floor plates tended to have interior courtyards for this purpose as well. But modern office buildings have huge floor plates that are just aren't practical to turn into residential units. You could do something awkward like putting residential units around the perimeter, with a core used for storage units, meeting rooms, etc. But those just don't make very efficient use of the space.
Also, even beyond the completely intractable problem of floor plate depth, you still have to completely gut such a building to convert it to residential. The plumbing, wiring, ventilation, and all interior spaces need to be redone.
Much like the dubious concept of shipping container homes, you always have to ask, "what am I actually saving by reusing this?" And in a big building like that, the structure of the building - the actual beams, columns, floor slabs, etc., only represent approximately 20% of the entire cost of the building. It's the same problem with 3D printed homes. You can 3D print the shell of a home, but that's only a small portion of a home's overall cost. So by gutting such a tall building and turning it into residential, you only save maybe 20% of the cost, whatever value is in the structure itself. It's just not worth it except in the case of some older buildings that are easier to adapt. Far better to just tear the whole thing down and build something new, built to modern codes and standards and without all the compromises that come from reusing an old structure.
The one case I can see it really being worth the hassle is in the case of historical landmark buildings. If we want to convert the Empire State Building to residential, well...that's such a landmark building that it might be worth the hassle. People would pay a premium to live in such a notable building. In such cases, conversions to more in-demand uses make sense. People are willing to pay a premium, and the conversion produces new utility for an old building, thus increasing the likelihood that it will be preserved and not neglected.
This all makes sense, but it seems uncreative. There used to be a lot of old buildings converted into lofts. I suspect that’s a pretty inefficient use of space, but it still happened. What do...
This all makes sense, but it seems uncreative. There used to be a lot of old buildings converted into lofts. I suspect that’s a pretty inefficient use of space, but it still happened. What do markets have to be like for that to make sense?
The key word is old. A lot of those old factory and warehouse buildings were built to allow natural ventilation. An early 20th century factory can be converted to residential. An old Walmart...
The key word is old. A lot of those old factory and warehouse buildings were built to allow natural ventilation. An early 20th century factory can be converted to residential. An old Walmart can't.
There was a fundamental change in architecture that came with the introduction of air conditioning and central HVAC systems. Think of the huge cube farms that big modern office buildings have. Think how far your cube might be from an exterior wall. There's just not a way to fill that space with regular-sized apartments.
Now, you can of course convert them into cavernous lofts/studio spaces. But those old factory to loft conversions were aided by high ceilings. Office buildings don't have those high ceilings. Imagine a "loft" apartment with ceilings 8' high. Imagine a bedroom 50' wide with ceilings 8' high. It would be downright unsettling to live there. Maybe a few oddballs would be willing to inhabit such a space, but the market rate for such rentals would be crap. Again, better to just tear down and build fresh.
You might try and demolish every other floor plate to give yourself those high ceilings you find in the old factory loft conversions, but you can't do that. Those floor slabs are part of the lateral force resisting system. They're needed to distribute wind loads to the building's braces or shear walls; you can't just go knocking them out. In theory, you could, but you would have to add so much structural reinforcement that you're effectively building a whole new structure.
I know it's hard to accept, but there are some problems you can't just brute force with raw creativity, and this is one of them. Sure, with unlimited budget, you can make anything happen. But the whole point of conversions (outside of historical structure preservation) is to save money. If you can't do it in an economical manner, there's no point doing it. And most of these old office buildings aren't really worth saving. The bland cube-farm glass towers boxes are uninspired buildings not really of historical note.
And it's not like the materials from these structures will end up in the landfill. The steel columns and beams will be melted down to make new steel. The concrete gets ground up to make fill or new concrete. The wiring is gathered up and recycled. The parts that aren't recycled are the parts that you would have to throw away anyway in a commercial to residential conversion - things like drywall, PVC piping, etc. And even that is recyclable to some degree.
We build buildings to purpose. And sometimes, you simply cannot practically repurpose them, any more than you can repurpose an SUV into an airplane.
My understanding is all utilities are a nightmare. Offices aren't setup to have sinks, showers, and toilets every so many sqft on the floor. Let alone things like electrical/gas for the...
My understanding is all utilities are a nightmare. Offices aren't setup to have sinks, showers, and toilets every so many sqft on the floor. Let alone things like electrical/gas for the kitchen/washer/dryer. You might be able to do some weird communal setup per floor, but it's still going to be extremely expensive for a subpar experience.
I believe artists would live in lofts that lacked basic amenities, and maybe technically it wasn’t up to code for inhabited space? One difference might be that the rent was cheap, so it didn’t...
I believe artists would live in lofts that lacked basic amenities, and maybe technically it wasn’t up to code for inhabited space? One difference might be that the rent was cheap, so it didn’t matter if there were a lot of quirks? And maybe the landlords never earned high rents before for industrial space, so they don’t have high expectations.
That would be a situation where the landlord didn’t do an expensive conversion to residential space. They just rented it out and didn’t ask questions.
Yeah there's a lot of interesting edge case things. However renting out a loft on a mostly empty, or even occupied, business that technically may not meet code probably isn't looked at too...
Yeah there's a lot of interesting edge case things. However renting out a loft on a mostly empty, or even occupied, business that technically may not meet code probably isn't looked at too closely.
A lot harder to do when you buy a 20 floor office building with the goal of gutting it and converting to residential. You could maybe change the laws or something, and perhaps there is some low rent communal living solution someone can come up with that isn't super dangerous, but even then it's a major issue that's probably easier to solve by just demoing and building something that fits your needs.
Office values would have to drop even more. Even then, it still might be cheaper to tear down and start fresh. Modern office buildings have massive floor plates with open floor plans which simply...
Office values would have to drop even more. Even then, it still might be cheaper to tear down and start fresh. Modern office buildings have massive floor plates with open floor plans which simply don't convert easy. The ratio of floor space to windows is awful basically.
On top of those logistical issues, you will also need to fight NIMBY constituents and all of the laws they’ve had put in place over the last few decades.
On top of those logistical issues, you will also need to fight NIMBY constituents and all of the laws they’ve had put in place over the last few decades.
This is really good one-stop explanation for why it's very, very difficult and expensive to convert modern office buildings into apartments. Old apartment and office buildings had to conform the...
This is really good one-stop explanation for why it's very, very difficult and expensive to convert modern office buildings into apartments.
Old apartment and office buildings had to conform the same physics of habitability.
Modern mechanical and lighting systems enabled buildings to break those physics. No longer do modern buildings have to respect the need for natural ventilation or sunlight.
Unfortunately the vast majority of modern office buildings are built in a way that makes them extremely expensive to convert to housing (see this article). Simple stuff like adding plumbing to...
Unfortunately the vast majority of modern office buildings are built in a way that makes them extremely expensive to convert to housing (see this article). Simple stuff like adding plumbing to every apartment (versus the centralized bathrooms of an office) is so expensive it can actually be cheaper to tear down and start fresh. One option might be congregate shelters with pallet beds like you'd see in a gymnasium as part of emergency shelters, but that kind of housing is essentially illegal to build and operate in most Anglophone regions.
Fundamentally, the issue with housing in San Francisco is a lack of a supply due to rampant NIMBYism and insane amounts of regulation and red tape. Their leftist council members like DSA member Dean Preston have made things worse. San Francisco housing construction and permitting is a joke. They approved only 1823 units in the entire year of 2023. Obviously, more people than that want to move to the city.
Well as we all know, the only true leftist is whoever supports and enacts the policies I personally agree with. Dean Preston is a member of the DSA which is very explicitly a leftist socialist...
Well as we all know, the only true leftist is whoever supports and enacts the policies I personally agree with. Dean Preston is a member of the DSA which is very explicitly a leftist socialist organization, so I don't know how he wouldn't qualify.
If San Francisco council members were neoliberals, they'd actually be doing supply side reforms instead of supply side skepticism. California just can't help but subsidize demand.
Well, this is just where trying to put politics on a dimensional scale comes has issues. On some aspects, they are quite far to the left. On others, not so much. But also, it’s not an agreed upon...
Well, this is just where trying to put politics on a dimensional scale comes has issues. On some aspects, they are quite far to the left. On others, not so much. But also, it’s not an agreed upon position either. I think the left position against housing development is something along the lines of it’ll “they’ll just make luxury condos, which will increase housing costs even more, and destroy historic neighborhoods/gentrify areas”.
I know that building well. I'm not surprised. It should be noted that it's on an extremely rough intersection and street. That stretch of 6th St by Market has lots of homeless folks and drug...
I know that building well. I'm not surprised.
It should be noted that it's on an extremely rough intersection and street. That stretch of 6th St by Market has lots of homeless folks and drug addicts who hang out on the street. The sidewalks have more dog and too-big-to-be-dog poop and litter than any other street in the city; whenever I walk there, I have to keep my eyes glued to the ground and play hop scotch. Literally every single sidewalk ‘tile’ has poop or poop smears, I’m not exaggerating. 50% of the time I see an ambulance there to handle an overdose or other emergency.
That office building has been empty for a while. In this market, potential office tenants have way, way better options elsewhere in the city.
in this instance, this building would be better served to become some sort of shelter/communal living space since it's so hard to convert it to real housing. It would be a good place for lots of...
in this instance, this building would be better served to become some sort of shelter/communal living space since it's so hard to convert it to real housing. It would be a good place for lots of services focused on the unhoused to be put up in.
I don’t know either. Sometimes the bank sells the debt after making the loan. There’s no telling who was left holding the bag. Hopefully they are diversified.
I don’t know either. Sometimes the bank sells the debt after making the loan. There’s no telling who was left holding the bag. Hopefully they are diversified.
It depends which market you mean. If there were lots of home owners walking away from their mortgages, that would be 2008 all over again. It doesn’t seem too likely? Lending standards became more...
It depends which market you mean. If there were lots of home owners walking away from their mortgages, that would be 2008 all over again. It doesn’t seem too likely? Lending standards became more strict after that.
Our neighbor put his house on the market and it sold immediately, at well above asking price.
Having dropped last month, at which point it was down 5 percent year-over-year, the weighted average asking rent for an apartment in San Francisco has since dropped another 3 percent to $3,300 a month, which is 9 percent lower than at the same time last year, nearly 20 percent lower than prior to the pandemic and 26 percent below its 2015-era peak of nearly $4,500 a month, with the average asking rent for a one-bedroom in San Francisco now hovering around $2,900 per month (which is 3 percent lower than at the same time last year, 17 percent lower than prior to the pandemic and nearly 22 percent below peak), all despite ongoing misreports of a “market rebound” or “pivot.”
I just signed a lease on a very nice apartment in a moderately large building in SF. They gave me 2 months free rent and had plenty of units. Not exactly a sign of a seller’s market. What’s funny...
I just signed a lease on a very nice apartment in a moderately large building in SF. They gave me 2 months free rent and had plenty of units. Not exactly a sign of a seller’s market.
What’s funny is I heard them say they’re “not allowed to advertise” that deal. They use Real Page. I assume the Real Page rental cartel rules are what they’re referring to.
It seems similar to having a sale, a way of offering a better deal without lowering the official price. When the sale is over, the price goes up again, but it doesn't look like a price increase....
It seems similar to having a sale, a way of offering a better deal without lowering the official price. When the sale is over, the price goes up again, but it doesn't look like a price increase.
Also, maybe it's due to rent control? California has (mild) rent control now that limits price increases, so that would be a way of getting around it.
San Francisco's rent control seems to be limited to older buildings, 1979 and older. It seems like a pretty big exemption to me, but maybe I'm underestimating how many older buildings there are. I...
San Francisco's rent control seems to be limited to older buildings, 1979 and older. It seems like a pretty big exemption to me, but maybe I'm underestimating how many older buildings there are.
I expect statewide rent control still applies, though? I didn't find a website about that explicitly.
As long as there are more people than last year the housing market won't do the same thing. Even during the biggest housing crashes of the last few decades the Bay Area housing prices dipped all...
As long as there are more people than last year the housing market won't do the same thing. Even during the biggest housing crashes of the last few decades the Bay Area housing prices dipped all of 2-3%, not even enough to balance out the increases of the few years before.
The city should of bought it and converted it to help the unhoused.
Conversions like that are a lot like the evergreen concept of shipping container homes. They sound great on the surface, but they fail when you dig into the details.
Unfortunately, office-to-residential conversions rarely make sense, at least with any building built after the introduction of air conditioning. Residential units need windows for ventilation and emergency egress. In offices built before air conditioning, the floor plates were smaller, as individual office spaces needed to allow for natural ventilation. Buildings with larger floor plates tended to have interior courtyards for this purpose as well. But modern office buildings have huge floor plates that are just aren't practical to turn into residential units. You could do something awkward like putting residential units around the perimeter, with a core used for storage units, meeting rooms, etc. But those just don't make very efficient use of the space.
Also, even beyond the completely intractable problem of floor plate depth, you still have to completely gut such a building to convert it to residential. The plumbing, wiring, ventilation, and all interior spaces need to be redone.
Much like the dubious concept of shipping container homes, you always have to ask, "what am I actually saving by reusing this?" And in a big building like that, the structure of the building - the actual beams, columns, floor slabs, etc., only represent approximately 20% of the entire cost of the building. It's the same problem with 3D printed homes. You can 3D print the shell of a home, but that's only a small portion of a home's overall cost. So by gutting such a tall building and turning it into residential, you only save maybe 20% of the cost, whatever value is in the structure itself. It's just not worth it except in the case of some older buildings that are easier to adapt. Far better to just tear the whole thing down and build something new, built to modern codes and standards and without all the compromises that come from reusing an old structure.
The one case I can see it really being worth the hassle is in the case of historical landmark buildings. If we want to convert the Empire State Building to residential, well...that's such a landmark building that it might be worth the hassle. People would pay a premium to live in such a notable building. In such cases, conversions to more in-demand uses make sense. People are willing to pay a premium, and the conversion produces new utility for an old building, thus increasing the likelihood that it will be preserved and not neglected.
This all makes sense, but it seems uncreative. There used to be a lot of old buildings converted into lofts. I suspect that’s a pretty inefficient use of space, but it still happened. What do markets have to be like for that to make sense?
The key word is old. A lot of those old factory and warehouse buildings were built to allow natural ventilation. An early 20th century factory can be converted to residential. An old Walmart can't.
There was a fundamental change in architecture that came with the introduction of air conditioning and central HVAC systems. Think of the huge cube farms that big modern office buildings have. Think how far your cube might be from an exterior wall. There's just not a way to fill that space with regular-sized apartments.
Now, you can of course convert them into cavernous lofts/studio spaces. But those old factory to loft conversions were aided by high ceilings. Office buildings don't have those high ceilings. Imagine a "loft" apartment with ceilings 8' high. Imagine a bedroom 50' wide with ceilings 8' high. It would be downright unsettling to live there. Maybe a few oddballs would be willing to inhabit such a space, but the market rate for such rentals would be crap. Again, better to just tear down and build fresh.
You might try and demolish every other floor plate to give yourself those high ceilings you find in the old factory loft conversions, but you can't do that. Those floor slabs are part of the lateral force resisting system. They're needed to distribute wind loads to the building's braces or shear walls; you can't just go knocking them out. In theory, you could, but you would have to add so much structural reinforcement that you're effectively building a whole new structure.
I know it's hard to accept, but there are some problems you can't just brute force with raw creativity, and this is one of them. Sure, with unlimited budget, you can make anything happen. But the whole point of conversions (outside of historical structure preservation) is to save money. If you can't do it in an economical manner, there's no point doing it. And most of these old office buildings aren't really worth saving. The bland cube-farm glass towers boxes are uninspired buildings not really of historical note.
And it's not like the materials from these structures will end up in the landfill. The steel columns and beams will be melted down to make new steel. The concrete gets ground up to make fill or new concrete. The wiring is gathered up and recycled. The parts that aren't recycled are the parts that you would have to throw away anyway in a commercial to residential conversion - things like drywall, PVC piping, etc. And even that is recyclable to some degree.
We build buildings to purpose. And sometimes, you simply cannot practically repurpose them, any more than you can repurpose an SUV into an airplane.
My understanding is all utilities are a nightmare. Offices aren't setup to have sinks, showers, and toilets every so many sqft on the floor. Let alone things like electrical/gas for the kitchen/washer/dryer. You might be able to do some weird communal setup per floor, but it's still going to be extremely expensive for a subpar experience.
I believe artists would live in lofts that lacked basic amenities, and maybe technically it wasn’t up to code for inhabited space? One difference might be that the rent was cheap, so it didn’t matter if there were a lot of quirks? And maybe the landlords never earned high rents before for industrial space, so they don’t have high expectations.
That would be a situation where the landlord didn’t do an expensive conversion to residential space. They just rented it out and didn’t ask questions.
Yeah there's a lot of interesting edge case things. However renting out a loft on a mostly empty, or even occupied, business that technically may not meet code probably isn't looked at too closely.
A lot harder to do when you buy a 20 floor office building with the goal of gutting it and converting to residential. You could maybe change the laws or something, and perhaps there is some low rent communal living solution someone can come up with that isn't super dangerous, but even then it's a major issue that's probably easier to solve by just demoing and building something that fits your needs.
Man that would be so accessible for a wheelchair user I think.
Office values would have to drop even more. Even then, it still might be cheaper to tear down and start fresh. Modern office buildings have massive floor plates with open floor plans which simply don't convert easy. The ratio of floor space to windows is awful basically.
On top of those logistical issues, you will also need to fight NIMBY constituents and all of the laws they’ve had put in place over the last few decades.
Appreciate the information, the more you know!
The NYT had a really good interactive article on this maybe a year ago.
This is really good one-stop explanation for why it's very, very difficult and expensive to convert modern office buildings into apartments.
Old apartment and office buildings had to conform the same physics of habitability.
Modern mechanical and lighting systems enabled buildings to break those physics. No longer do modern buildings have to respect the need for natural ventilation or sunlight.
Unfortunately the vast majority of modern office buildings are built in a way that makes them extremely expensive to convert to housing (see this article). Simple stuff like adding plumbing to every apartment (versus the centralized bathrooms of an office) is so expensive it can actually be cheaper to tear down and start fresh. One option might be congregate shelters with pallet beds like you'd see in a gymnasium as part of emergency shelters, but that kind of housing is essentially illegal to build and operate in most Anglophone regions.
Fundamentally, the issue with housing in San Francisco is a lack of a supply due to rampant NIMBYism and insane amounts of regulation and red tape. Their leftist council members like DSA member Dean Preston have made things worse. San Francisco housing construction and permitting is a joke. They approved only 1823 units in the entire year of 2023. Obviously, more people than that want to move to the city.
Check out this article for great visualizations and descriptions of the city's problems: https://www.sfchronicle.com/projects/2023/san-francisco-housing/
I hear people calling SF leadership leftists, but honestly I don’t know if they can qualify. They seem like sparkling neoliberals.
Well as we all know, the only true leftist is whoever supports and enacts the policies I personally agree with. Dean Preston is a member of the DSA which is very explicitly a leftist socialist organization, so I don't know how he wouldn't qualify.
If San Francisco council members were neoliberals, they'd actually be doing supply side reforms instead of supply side skepticism. California just can't help but subsidize demand.
Well, this is just where trying to put politics on a dimensional scale comes has issues. On some aspects, they are quite far to the left. On others, not so much. But also, it’s not an agreed upon position either. I think the left position against housing development is something along the lines of it’ll “they’ll just make luxury condos, which will increase housing costs even more, and destroy historic neighborhoods/gentrify areas”.
In case anyone else was as confused as me, the council member’s name is not Dean Phillips, it’s Dean Preston.
Well that's what I get for writing a comment before bed. Thanks for the correction!
I know that building well. I'm not surprised.
It should be noted that it's on an extremely rough intersection and street. That stretch of 6th St by Market has lots of homeless folks and drug addicts who hang out on the street. The sidewalks have more dog and too-big-to-be-dog poop and litter than any other street in the city; whenever I walk there, I have to keep my eyes glued to the ground and play hop scotch. Literally every single sidewalk ‘tile’ has poop or poop smears, I’m not exaggerating. 50% of the time I see an ambulance there to handle an overdose or other emergency.
That office building has been empty for a while. In this market, potential office tenants have way, way better options elsewhere in the city.
in this instance, this building would be better served to become some sort of shelter/communal living space since it's so hard to convert it to real housing. It would be a good place for lots of services focused on the unhoused to be put up in.
I wonder about debt related to these properties.
I don’t know either. Sometimes the bank sells the debt after making the loan. There’s no telling who was left holding the bag. Hopefully they are diversified.
Housing market next, please.
It depends which market you mean. If there were lots of home owners walking away from their mortgages, that would be 2008 all over again. It doesn’t seem too likely? Lending standards became more strict after that.
Our neighbor put his house on the market and it sold immediately, at well above asking price.
On the other hand:
Average Rent in S.F. Continues to Drop, Over 25 Percent Below Peak
I just signed a lease on a very nice apartment in a moderately large building in SF. They gave me 2 months free rent and had plenty of units. Not exactly a sign of a seller’s market.
What’s funny is I heard them say they’re “not allowed to advertise” that deal. They use Real Page. I assume the Real Page rental cartel rules are what they’re referring to.
It seems similar to having a sale, a way of offering a better deal without lowering the official price. When the sale is over, the price goes up again, but it doesn't look like a price increase.
Also, maybe it's due to rent control? California has (mild) rent control now that limits price increases, so that would be a way of getting around it.
San Francisco and Oakland have had strict rent control for a long time, with some exceptions.
Concord just passed rent control.
San Francisco's rent control seems to be limited to older buildings, 1979 and older. It seems like a pretty big exemption to me, but maybe I'm underestimating how many older buildings there are.
I expect statewide rent control still applies, though? I didn't find a website about that explicitly.
Statewide rent control applies statewide.
Cities can be stricter but not more lax
As long as there are more people than last year the housing market won't do the same thing. Even during the biggest housing crashes of the last few decades the Bay Area housing prices dipped all of 2-3%, not even enough to balance out the increases of the few years before.