Red tape constrains SJ's office-to-housing conversions

Local companies that finance underutilized office buildings may be in the red — making more attractive the housing conversion argument. However, turning San Jose’s unused office spaces into residential units involves a unique price tag, says real estate expert Clare Trapasso. Cities where workers are abandoning physical offices, like SJ, are often the same places with excessive building regulations/costs. To receive daily updates of new Opp Now stories, click here.

Some office towers could go the way of “dead malls,” which many cities have repurposed into developments that mash up shopping with housing, entertainment, and dining. Some could even be retrofitted into schools, senior centers, or other community spaces.

But here’s the thing: Converting an office building into an apartment or condo building takes more than just a snap of the fingers. These are often costly, difficult projects that typically take years and miles of bureaucratic red tape to complete.

“One of the problems with trying to [repurpose] these types of buildings as housing is these areas tend to have higher costs, a lot more regulatory barriers, and long timelines for getting projects done,” says Jason M. Ward, associate director for the Rand Center for Housing and Homelessness in Los Angeles. “The areas where you might have the most opportunities are the areas that are the hardest to build in…”

Some companies, especially financial and legal firms, have already ordered employees back to the office five days a week. But plenty of employers are coming to grips with the reality that their workers may choose not to return to the office full time.

New York City “is booming,” says Miller. “But [residents] are not coming back to work in a physical office.”

New York City had the lowest office occupancy rate of the 10 cities tracked by Kastle. Just 35.3% of workers had returned to their cubicles in the week ending Aug. 24. They were also below 40% in Washington, DC, San Francisco, and Silicon Valley’s San Jose, CA.

Meanwhile, more than half of employees were back at their desks in the Texas cities of Houston, Dallas, and Austin, where the cost of city living and commute times are lower.

This article originally appeared in Realtor.com. Read the whole thing here.

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