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Comment by armchairhacker | Hacker News Reader

Instead of building new housing, cities should pay landlords and companies to convert their office space into apartments.

Every office turned into an apartment opens up space both by increasing remote workers and tenants. Convert enough, and both the newly-remote employees and those with jobs which require in-person get a virtual pay increase from decreased rent.

(I get in some sense that offices can't just be turned into apartments: you need to change the layout, install sound-proof walls and furniture, and there will be rooms without windows which presumably can't be rented. But also, many people are desperate for some kind of place to stay, so it seems like an office-cheaply-converted-into-suite would suffice)

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The cost of a conversion typically isn't much less than the cost of a complete demolition and rebuild.

So it just makes more financial sense to find a smaller building to upsize or one in more disrepair to demolish and rebuild than to convert a perfectly fine office building.

> The cost of a conversion typically isn't much less than the cost of a complete demolition and rebuild.

What?? Not saying the conversion is cheap but come on, the building is already there.

The walls are normally the cheap part. Running the necessary utilities through those walls quickly adds up in cost and it quickly becomes cheaper to put up new walls, or just a whole new building like the parent comment suggests.

You'd be surprised. The architecture and design podcast 99% Invisible did an episode on this recently. Give it a listen if you're interested in learning more. Here are some details from memory. Internal space without windows can't legally be made into residential. Plumbing and ventilation requirements are vastly different (in offices these go to larger centralized areas, in residential they go to smaller distributed locations). There are very few buildings that can be easily converted to apartments, and the costs of conversion for those that can be is expensive. Meaning what few conversations are possible are limited to luxury units.

https://99percentinvisible.org/episode/office-space/

> Internal space without windows can't legally be made into residential.

Residential: Bah; Dormitory: Yay!

In brief: [Charlie Munger—billionaire vice chairman of Warren Buffet's Berkshire Hathaway] has offered UCSB more than $200 million to build this dorm to his designs, which will cost an estimated $1.2 billion. The structure is a giant block in which almost none of the rooms have windows.

https://www.architectmagazine.com/design/buildings/the-munge...

Also, the Munger interview here is pretty funny: https://www.architecturalrecord.com/articles/15378-exclusive...

The type of plumbing, fires systems and ventilation change depending on office use to apartments.

The plumbing, electrical and code requirements are completely different for residential. Think kitchens and bathrooms every 10 to 20 feet. People need windows in all of the rooms. Most open offices couldn't be converted into residences.

Typically you'll have to put in all new electrical and plumbing, because the existing office level capacity is no where near sufficient. You'll have to completely redesign HVAC and ventilation as well since you can't have an entire floor be one climate and you'll need exterior ventilation for showers/cooking/laundry that aren't a consideration in an office. There might not even be enough space between floors to accommodate those things.

Then there's other code considerations like windows and fire exit distance requirements that become harder to meet once you start adding walls.

If you have to move all the floors, walls, utilities, elevators, and exits, how much of the original building are you actually leaving intact? Often times, even after doing all that, a conversion still isn't viable because there's just too much floor area and not enough windows to make any layout that isn't a 10k sqft single room studio viable.

I’ve seen enough factory to residential conversations to say that 10,000 sq ft studios are amazing.

They’re probably worth less per square foot than a bunch of smaller apartments, but they’re still worth way more than a typical N bedroom apartment.

You can always build rooms out of dividers, etc to break up the space.

A 10ksf studio doesn’t sound very affordable, though. How many residential tenants can afford that kind of space? Is there really a big market for that?

10ksf studios will reduce the cost of housing.

https://news.ycombinator.com/item?id=37524331

> you'll have to put in all new electrical and plumbing

The solution is dorm-style housing. Shared bathrooms to reduce plumbing requirements. Waiver of window requirements for internal rooms, possibly even units.

New York has a couple of these left, and they’re popular with young people first moving to the city. (Shared bathrooms. Units without windows are also popular, but they are illegal.) Unfortunately, it’s largely against code, and not for safety reasons.

Even a simple remodel of a normal house can be more expensive than building new, because building new is hella fast.

And commercial buildings are often just knocked down and a new one built because that's cheaper.

Everyone is saying plumbing/utilities - that's not usually the biggest cost or issue with conversions (although it is expensive).

It's lack of natural light and the size of the typical floor plate for offices that often render the projects impossible without significant structural rework.

This building in manhattan is in the range of ~$400/500/sqft to renovate existing offices to apts [1]. ANd that's with concessions from Adams in NYC to allow for windowless office rooms in the space.

Still likely better economics than a ground up rebuild, but likely only because the project can be completed and permitted much faster than a ground up project in big cities.

1 - https://gothamist.com/news/the-countrys-biggest-office-to-ap...

You’ve got a steel and concrete frame already there. Everything else is not only useless, but actively in the way and has to be replaced. And the end result will still suck because that building frame was designed in a fundamentally different way to how apartments are.

The thing is, people like to live near where the work is.

If one office among many is closing down, that puts these homes right in the centre of the action. That might make for a good residence and justify the cost. But if swaths of offices are closing down, as suggested earlier, there won't be any nearby work left. Why would people want to live in those converted buildings?

"the building is already there" can be said about any ghost town. Hell, in those ghost towns, many of those buildings are houses already. There being a building isn't a compelling enough reason to want to live somewhere.

You could probably find tons of low productivity industrial parks to raze to the ground in most cities and build housing if zoning wasn't a thing. If everything had to compete with housing markets absent heavy top-down gov planning cities would start shapeshifting very quickly.

I think we will evolve to this soon, first slowly then quickly, I don’t think we will self immolate over housing

You can raze the "low productivity" industrial parks and then set your watch by further price spikes in trades, logistics and maintenance.

If there's a market for it then it will exist. No one is stopping distribution warehouses from existing, it would be making warehouse real estate compete with everyone else. If it means shipping costs on Amazon to a particular region has to increase by a couple cents so people can buy a house in an area that's $50k+ cheaper (or at all) that's just basic competition of resources which we don't get up in arms about in any other situation.

If housing prices are still unnaturally high (putting pressure on other industries) then solve all the other issues beyond zoning: pro-NIMBY municipal policy, fire any politician/counselor who uses the phrase "rent control", eliminate height restrictions, streamline inefficient/byzantine development regulations and licensing, modernize and reform unions that slow housing development to preserve the original intended societal benefits of unions without the legacy cruft generating all the negative baggage, etc.

In principle conversion is a good idea, but I see no reason why the city should swoop in and give tax payer money to landlords.

> why the city should swoop in and give tax payer money to landlords.

is the only thing stopping better housing ideological aversion to subsidizing landlords?

If the landlords cannot find economical ways to turn offices into residential apartments, they won't do it. Therefore, it is in the city's interest to make such a subsidy.

This is a situation where capitalism is actually pretty close to optimal.

The landlord attempts to sell at a small enough loss to avoid bankruptcy.

If that fails, the lender (which should be collecting enough interest or holding enough insurance to absorb the shock) forecloses and sells at auction to the highest bidder.

The new owner effectively received a subsidy, since they bought way below cost.

Incompetent real estate holding companies and banks go under, increasing future economic efficiency.

If all this is so bad to lead to economic contagion, the government can bail out the retail investors and institutions that got swindled by the wall street folks.

That bailout is some tiny percentage of the cost of bailing out the real estate holders, since all the fiscally irresponsible companies that went under act as ablative shielding.

which is exactly what will happen, if there's no gov't intervention.

However, this will take years, if not a decade or two. The reason being that the real estate companies knows this is possible, and so is likely diversified, and therefore, can absorb the losses for a long time (as long as they have income elsewhere to make up for it), and hope for a reversal of demand for offices, or wait for organic growth to catch up.

They will not willingly bankrupt themselves and take a loss for no good reason - that's just stupid.

So in the mean time, the offices aren't being used efficiently. If the city is really keen on making good use of the space by making it residential, they can speed this process up by subsidizing.

The more leveraged companies will start failing in 3-5 years, especially if rates stay high.

Commercial leases are usually 10 year deals. Tenants who don’t walk will shrink and have leverage to negotiate.

The landlord should go bankrupt and the city can seize the property at the tax auction.

Real estate ownership has more direct and indirect subsidies than any business other than oil. Their greed shouldn’t be rewarded.

Let the government bailout the bank by buying and auctioning off the distressed asset.

Office buildings usually have floor plans and plumbing that make it extremely difficult to turn them into apartments.

They also usually have space for drop ceilings for exactly this reason.

It’s true that the $/sq ft value of post-conversion will be lower than pre-conversion but the idea that the building is negative value is nonsense. Sell each floor as a single unit unrentable condo for $1M, and let the new occupant put whatever floor plan they want in.

Office buildings have very few structural walls because companies frequently change floor plans.

Most of the articles I’ve seen saying the above is hard assume that building that the current owners of the buildings must turn a profit.

Similarly, they assume building codes are immutable. The buildings have safe fire exit routes, and adequate light. So, relax window requirements for individual rooms on the condition that each unit’s perimeter is at least N% window.

This is a 40-minute interview with a developer who specializes in converting office buildings into apartments:

https://podcasts.apple.com/us/podcast/what-it-really-takes-t...

It is from this interview that I learned that the plumbing often has to be entirely redone.

It’s not feasible for modernish, large floor plate buildings. These buildings are designed around fluorescent lighting and are usually made from tensioned concrete that you can’t drill for plumbing.

Older, prewar buildings are a totally different story.

Basically wherever you see a bunch of mostly empty glass buildings, half of them need to be demolished.

You'd have to gut the entire building or maybe even demolish it. Pretty much all of the mechanical would need to be redone.

Eh, there are quite a few apartment buildings in every major city which used to be something else like warehouses

Whataboutism doesn't change anything I said.

Which were gutted, abated, and rebuilt from the frame up.

Office building floors are concrete, usually. You cannot dictate where plumbing goes. Drain pipes are ruled by the iron fist of gravity. And down is technically in your downstairs neighbor's space.

I have seen few buildings in London itself which were warehouses and now have these weird shaped apartments with high ceiling height and a separate floor bedroom arrangement. A lot was kept from the old structure, some of them even make the plumbing added look more of an industrial design

And I doubt Meta spent $181m to get out of a lease of a warehouse.

Skyscrapers are much more difficult to convert (there's an NYT article on it).

Midrise buildings might be the best bet, but even then unless you allow "basically slumlord" conversions, it's probably simpler to knock and rebuild, even if you disguise it by leaving the outer walls up or something.

The “hang everything from the elevator shaft” design doesn’t allow that, does it? You might be able to take it to the joists if it’s not hurricane season but not more than that.

Industrial garage or old single story garment factory conversions are extremely popular with hipsters. Many of the smaller places can be converted into...something. I've seen some beautiful conversions in Pioneer Square/downtown Seattle.

But the taller office buildings are much harder to convert, not impossible, and can lead to some stunning excesses (like really high ceilings with horrible heating costs) that wouldn't be possible in a direct for residential build.

> , some of them even make the plumbing added look more of an industrial design

This was probably out of necessity rather than aesthetics, but again, hipsters (especially rich ones) love this stuff.

I agree, also converted 19th century warehouse has a nice ring to it. No one will probably pay the premium for a converted 5 year old building

Ya. Early 20th century work spaces with character work well for conversions. 10 year old office building that didn’t work out doesn’t…although my cousin lived in one in Seattle for a few years, he said it was weird but the rent was cheap.

Legacy warehouses are much easier buildings to retrofit.

Plus, a converted loft that was formerly a hosiery mill from the turn of the century has a certain character to it. An apartment that used to be an ATT call center doesn't have quite the same appeal.

If companies are letting go of real estate as some employees want to go remote, why would the said employees who are remote want to stick in the center of city where these offices are, but not go out a bit outside of the center or even suburbs.

If they do move out, the demand of real estate in the center anyway goes down

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