Office buildings are empty. We have a housing shortage. These two things lead most people to the obvious conclusion that we should repurpose office buildings into apartments and condos. This idea is a good one, it would avoid the expensive and carbon intensive process of tearing down the building to build a new one. It would also put housing right in the middle of many financial districts, right where they are most needed. But, as good of an idea as it sounds, there are many reasons why this will not work for most office buildings.
One of the reasons I have written about already. Offices have large floor plates which means it is hard to carve them up into individual dwellings which are required to have a window in each bedroom. Another important reason is the extra sewage pipes needed to turn one office floor into multiple units with multiple bathrooms. These pipes, unlike the wires for electrical, must go under the floor because fighting against gravity is never a good strategy. The sewage pipes also need a good amount of vertical space because they need to have around a 2 percent slope, which equates roughly to a quarter inch of vertical drop for every foot of pipe.
There are a couple of ways to make room for these pipes. One is to build a false floor above the original to allow for pipes to occupy the space in between the two. This is only feasible in offices with high ceilings since no one (except Hobbits maybe) wants to live in a home with a lowered ceiling. The other way to make room for sewage pipes is to trench into the concrete floors. As hard as this sounds, the way that most large buildings are built, it is likely even harder than you might think.
The concrete that most of us have in our homes is poured into place and left to dry. But for large buildings, they use a different process. To help strengthen the concrete buildings use what is called post-tensioned concrete which is made by pouring concrete mix over a series of “tendons” that are anchored on each side of the slab. Once the concrete dries hydraulic jacks are used to squeeze the concrete, making it denser and therefore stronger. This technique is more expensive but it allows the slabs to be thinner and makes them much more durable.
The downside, of course, to this technique is that the concrete becomes much harder to cut. So, in order to make the trenches needed for sewage lines special tools and techniques are needed or else it could cause a violent failure of the slab that could injure workers or even compromise the building itself. To avoid such catastrophe contractors need to first locate the tendons, often by using ground penetrating radar. Then the tension is released by releasing the jacks. Specialized equipment, like water jet or even plasma cutters, must be used to cut the slab so the tendons are not accidentally cut in the process. Finally the slab will need to be reinforced again once the pipes have been laid and covered with new concrete.
All of this means that it costs a lot more money and takes a lot more time to trench these types of floors. This can make it not financially viable to convert these types of buildings into housing, as much as we might need it. It could also mean that office buildings without post-tensioned concrete floors might have a bit of a premium, since they are better candidates for conversion. Going forward building designers and engineers need to think about the entire lifecycle of the buildings they build. We will likely continue to see post-tensioned concrete construction, but hopefully they will be put into buildings that have other options in the unfortunate case that they need to be converted into a new use entirely.
Writing today’s article I found this great blog post from NYU’s Furman Center that includes an interactive map of NYC’s Office and Hotel properties to provide a sense of the areas where housing conversions make the most sense.
There are so many stories about the commercial real estate apocalypse that when I find one about the bright side of the market I take note. This one has some good insights from the Chief Investment Officer of Nuveen, who thinks that cities like NYC and Miami still have a lot of upside potential.
Shares of NYC’s largest landlord, SL Green, surged after it announced that it had sold a 50 percent stake in one of its office buildings at a $2 billion valuation. Many are taking this news to mean that the drought of investment in the area might have bottomed out.
The influential trade group The National Association of Realtors has announced that they are conducting a formal search for a new CEO, in case any of you amazing Propmodo subscribers are looking for a new gig.