Converting Commercial Spaces: Home Sweet Office?

The COVID-19 pandemic has left many office buildings sitting empty as more companies have switched to remote or hybrid working. This presents an opportunity to convert these buildings into homes, which could help address the housing shortage in many cities. However, there are several challenges and limitations to converting offices into residential spaces.

From a structural perspective, office buildings typically have fewer bathrooms than apartments and deeper, wider floor plans with less natural light. There are also different building codes for offices and residential buildings, requiring additional changes to meet code requirements. Converting office buildings into homes can be expensive, with costs ranging from $100 to over $500 per square foot.

In addition, there are zoning and land use restrictions that limit the conversion of office buildings into homes in certain areas. Many office buildings are located in downtown areas that lack neighbourhood amenities such as schools or grocery stores, making them less desirable places to live.

Despite these challenges, some cities have implemented policies to incentivize office-to-residential conversions, including tax credits, grants, and exemptions from certain zoning requirements. Proponents of office-to-residential conversions argue that it is a key strategy for revitalizing downtown areas and addressing the housing crisis.

Overall, while converting office buildings into homes can be difficult and costly, it may be a viable option in some circumstances, especially with the right incentives and creative solutions.

Electrical, HVAC, and plumbing changes

Electrical Changes

Residential and commercial buildings have distinct electrical requirements. While office buildings typically cater to computers, projectors, and copy machines, residential spaces demand more power for kitchen appliances. As a result, remodelers will need to address the electrical load from heating and air conditioning. One solution is to add a subpanel to each residential unit, as mandated by U.S. code, ensuring that residents can easily access the circuit breakers or fuses for their unit.

Additionally, fire alarm devices must be augmented due to the increased number of rooms in residential buildings. Internet, telephone, and cable systems may also require revisions to ensure that each tenant has access to these essential services. While these electrical modifications are costly, the most challenging aspects are typically the addition of subpanels and metering to determine each unit's energy consumption.

HVAC Changes

Commercial buildings often feature centralized HVAC systems, while residential buildings necessitate separate HVAC systems and controls for each unit. Mid-rise and high-rise apartment buildings commonly employ a centralized HVAC system with variable air volume units in each zone, allowing for customized airflow adjustments.

It's important to note that residential buildings generally have a smaller HVAC load than office spaces, so the existing HVAC system in an office-to-home conversion may be larger than necessary. Oversized air conditioning systems can lead to humidity issues, especially with the increased humidity generated by residential activities like showering, laundry, and cooking. To mitigate this, additional exhaust fans and variable air volume units can be installed. These additions come with their own costs, and ductwork remodeling may also be required.

Plumbing Changes

In office buildings, plumbing is usually centralized, with bathrooms grouped together on each floor. On the other hand, residential buildings require distributed plumbing, with each unit having its own bathroom and kitchen. The main challenges in this transition lie in the service sizes of the pipes and the interior plumbing system. The pipes supplying water and sewer services in an office building may not be adequately sized for residential usage, and local codes and the number of plumbing fixtures will influence the required adjustments.

Reworking the plumbing for water is generally feasible, but reconfiguring the sanitary sewer system, especially on upper floors, is a more intricate task. This is due to the need for longer horizontal pipes to maintain the necessary vertical drop to ensure proper flow direction. To address this, new plumbing chases—vertical cavities for pipes—may need to be created, which could entail core drilling of floors. While this plumbing overhaul is expensive, it can be accomplished with sufficient investment.

Natural light and windows

Importance of Natural Light

Natural light is crucial for the well-being of occupants, offering a range of physical and mental health benefits. Firstly, natural light boosts productivity and improves mood. Studies have shown that exposure to natural light can increase test scores, sales performance, and overall productivity. It also helps regulate circadian rhythms, promoting better sleep quality and reducing Seasonal Affective Disorder (SAD). Additionally, natural light improves physical health by aiding vitamin D production, reducing the risk of nearsightedness, and lowering blood pressure.

Importance of Windows

Windows are the primary source of natural light in a building, and their placement and design significantly impact the distribution of light within a space. When converting an office building into a home, it is essential to consider the following:

• Window Placement: The number and location of windows are critical. Narrower office buildings with more perimeter areas and viewing windows are generally better suited for residential conversion. It is important to ensure that each living space, including bedrooms, living rooms, and kitchens, has access to natural light.
• Window Quality: The quality of windows also matters. Clear, newer windows can enhance the amount of natural light entering the space while also improving energy efficiency and reducing utility costs.
• Window Treatments: Using light-coloured drapes, blinds, or shades can help diffuse natural light throughout the space while providing privacy when needed.
• Skylights: In rooms where privacy is a concern, such as bathrooms or walk-in closets, skylights can be a great alternative to traditional windows, providing natural light without compromising privacy.
• Exterior Features: Trees, shrubs, awnings, and shutters can be used to shield windows from intense sunlight, while lattices, screen doors, and exterior shades can help diffuse light evenly throughout the room.

In conclusion, natural light and windows play a pivotal role in converting an office building into a home. By incorporating thoughtful window placement, quality windows, and strategic window treatments, the resulting residential space will be brighter, healthier, and more appealing to potential occupants.

Zoning and land use restrictions

Zoning laws typically divide land into different zones or districts, such as residential, commercial, agricultural, or industrial areas. These zones dictate the types of buildings and uses permitted in each area. For instance, an area zoned as ""residential"" might only allow single-family or multi-family houses, while a "commercial" zone could permit retail stores and other businesses.

In the context of office-to-residential conversions, a critical challenge is that many areas zoned for commercial office buildings are not zoned for residential use. Obtaining approval for a zoning variance to allow residential use can be a lengthy and complex process. This hurdle can significantly delay projects and extend timelines, especially for buildings with multiple tenants, as owners may need to wait for all tenant leases to expire before initiating the conversion process.

Additionally, zoning laws can regulate the details of construction and impose specific requirements on building features. For example, zoning regulations may dictate the minimum number of parking spaces, open spaces, or the placement of entry and exit points. They can also limit the maximum height of buildings or impose restrictions on exterior layouts, such as the number and placement of windows. These factors can significantly impact the feasibility and cost of conversions, especially if substantial changes are needed to meet zoning requirements.

Furthermore, zoning laws can be subject to change by local governments, provided they comply with state and federal statutes. These changes can be driven by various factors, including the need to promote economic development, control traffic flow, manage noise levels, or address housing shortages. However, rezoning decisions can be controversial and lead to conflicts if residents dispute the designated land usage.

To navigate zoning and land use restrictions effectively, it is essential to understand the specific regulations applicable to the desired conversion location. Consulting local zoning maps, ordinances, and guidelines is crucial to determining whether the intended use of the property is permitted or prohibited. If a zoning variance or exception is required, a thorough understanding of the applicable provisions and procedures is necessary to increase the chances of a successful application.

Costs and financial incentives

Converting offices into homes is a costly endeavour, and there are many financial challenges that make it less appealing for developers. The costs of making the necessary physical changes can range from $100 per square foot to over $500 per square foot, depending on the building design. For instance, the cost of converting an office building in downtown San Francisco is estimated to be between $472,000 to $633,000 per unit, excluding necessary seismic upgrades.

There is a small difference in the value of an office building compared to a residential building, which offers little financial incentive for developers to take on the conversion costs. In 2022, the average net operating income for office buildings was only $0.50 per square foot less than for multifamily housing. As a result, these projects are rarely financially feasible without subsidies.

However, repurposing existing buildings can save developers time and money, depending on the project. Converting existing buildings can be up to 30% cheaper and quicker than building from scratch, even when updates are required. Conversion projects can take six to twelve months less than constructing a new property, and they may also have a smaller carbon footprint due to reduced material usage.

To encourage more conversions, some cities have implemented policies such as tax credits, grants, no-interest loans, and exemptions from certain zoning requirements. For example, New York City established a tax abatement in 1995 to encourage office-to-residential conversions in Lower Manhattan, resulting in a 13% conversion rate and nearly 13,000 new housing units. Chicago has offered tax increment financing and grants for ground-level businesses to support its conversion projects, while Washington, DC, introduced a 20-year property tax break for developers turning commercial spaces into residential spaces.

In addition to financial incentives, streamlining the permit and zoning process and creating a "one-stop shop" at City Hall to handle conversions can also help speed up the metamorphosis of vacant offices into homes.

Building suitability

Windows and Natural Light

Adequate natural lighting is essential for a comfortable living space. Buildings with inner courtyards or other features that allow for an abundance of natural light are better suited for conversion. Narrower office buildings with more perimeter areas and viewing windows can also be more easily transitioned into residential spaces.

Plumbing and Electrical Systems

Residential buildings require distributed plumbing systems, with each unit typically having its own kitchen and bathroom. This can be a significant challenge in office buildings, which often have centralised plumbing. Additionally, electrical revisions are necessary to accommodate the different needs of residential units, such as kitchen appliances.

Heating, Ventilation, and Air Conditioning (HVAC)

Residential buildings need separate HVAC systems and controls for each unit, while commercial buildings usually have centralised systems. High-rise apartment buildings may use a centralised HVAC system with variable air volume units in each zone to adjust airflow.

Structural Elements and Zoning

The shell and structural elements of the office building can typically be retained during conversion, but remodelling to create individual apartments or homes may be necessary. Zoning laws and regulations can also impact the suitability of a building for conversion, as some areas may not allow for residential use or may have specific requirements for parking, open space, or door locations.

Building Age and Condition

Older office buildings constructed before central heating and cooling systems became standard may be good candidates for conversion. These buildings were often designed to maximise window access and airflow. Additionally, office buildings that are due for remodelling or upgrades may be more cost-effective for conversion, as the systems (HVAC, plumbing, electrical) can be updated simultaneously.

Location and Neighbourhood Amenities

The location of the building is crucial, as well-placed windows can be blocked by neighbouring structures, reducing natural light. Additionally, the success of office-to-residential conversions can depend on the availability of neighbourhood amenities such as schools or grocery stores, making the area more desirable for potential residents.

In summary, while there are challenges and limitations to converting office buildings into homes, certain buildings may be well-suited for this type of transformation. By considering factors such as natural light, plumbing, electrical systems, HVAC, structural elements, zoning, building age, location, and neighbourhood amenities, it is possible to identify buildings with the potential for successful conversion projects.

Frequently asked questions