Home prices are skyrocketing and vacancy rates in downtown office buildings are plummeting. What if there is a way to fix both problems at the same time. Conor Sen at Bloomberg has an idea…(Bloomberg)
- Office occupancy might never come back. Sen writes that by the end of January, “only half of New York City office workers are expected to be back on an average weekday, and that number isn’t expected to grow significantly over time.” And that even in the best case scenario demand for office space would still be down 20% to 30% compared with pre-pandemic levels. This, of course, is also happening while rents across the country are skyrocketing.
- The solution. “Economics 101 would suggest converting some existing under-utilized office buildings to residential units…if such conversions can pass muster with real estate bean counters, it’s worth considering.”
Sen goes on to argue its not just econ 101, but also will stop a possible death spiral for office buildings. “The necessity of building apartments in office-centric downtowns isn’t just about meeting the need for new housing — it will help ensure office districts avoid the kind of downward spiral that’s possible if something isn’t done to stabilize them.”