Office Landlords Consider Demolitions As Conversion Challenges Mount

[DCReid]

As Class-B and C offices empty out, owners are getting increasingly nervous.

Most dream of giving their buildings a new life by converting them to apartments, especially in a city like New York, where residential vacancy is at a 50-year low. Others are wrestling with the wrecking ball.

“A pretty high percentage of those buildings won't have a future,” said Peter Bafitis, managing principal at architecture firm RKTB. “[Pre-World War II] buildings lend themselves better to residential, but you’re going to have quite a few of the massive floor plate buildings after World War II. What do you do with them?”..

https://www.bisnow.com/new-york/news...s-mount-125557

[James Bond Agent 007]

Could they turn some of them into data centers?

[big T]

Originally Posted by James Bond Agent 007

Could they turn some of them into data centers?

Intriguing idea. Data centres in high rises (usually on lower floors) are already a thing, but realistically it's only really suitable for one specific sub-type - co-location. (the model where you rent a cage and bring your own stuff). Companies like having easy access to equipment they must maintain on a regular schedule so downtown locations can make sense there. That's a small slice of the overall DC pie though. So I'd guess the supply of class B & C facing conversion vastly exceeds downtown DC demand.

For large scale either private (FAANG) or hands-off cloud hosting (Digital Ocean etc) a gigantic low rise in the boonies is hard to beat.

[LosAngelesSportsFan]

Originally Posted by James Bond Agent 007

Could they turn some of them into data centers?

There are several in Downtown LA that are data centers, mainly clustered around the one Wilshire building and the 2 blocks around it

[uaarkson]

I don’t know man. It may be time to just admit that massive office skyscrapers are now simply obsolete. Sure, some can be converted in markets where it pencils out. But most American downtowns just don’t have the critical mass of residential and small business density that generates the levels of demand necessary for residential conversions of large structures.

In Detroit, there has been frequent recent discussions on the fate of the Renaissance Center. In the absence of GM’s corporate workforce, the sheer absurdity of the complex is more nakedly apparent than ever. It is an anti-urban fortress, icon of corporate greed and excess, and there is now a real possibility that it will be partially or even mostly demolished.

[giallo]

Originally Posted by uaarkson

I don’t know man. It may be time to just admit that massive office skyscrapers are now simply obsolete. Sure, some can be converted in markets where it pencils out. But most American downtowns just don’t have the critical mass of residential and small business density that generates the levels of demand necessary for residential conversions of large structures.

In Detroit, there has been frequent recent discussions on the fate of the Renaissance Center. In the absence of GM’s corporate workforce, the sheer absurdity of the complex is more nakedly apparent than ever. It is an anti-urban fortress, icon of corporate greed and excess, and there is now a real possibility that it will be partially or even mostly demolished.

That's just crazy to me. I mean, I get it. The cost to keep that building running, even without anyone in it, must be a lot, but to teardown a structure of that size and prominence is just nuts. There's got to be other ways to use it rather than to demolish it.

[iheartthed]

Originally Posted by uaarkson

I don’t know man. It may be time to just admit that massive office skyscrapers are now simply obsolete. Sure, some can be converted in markets where it pencils out. But most American downtowns just don’t have the critical mass of residential and small business density that generates the levels of demand necessary for residential conversions of large structures.

In Detroit, there has been frequent recent discussions on the fate of the Renaissance Center. In the absence of GM’s corporate workforce, the sheer absurdity of the complex is more nakedly apparent than ever. It is an anti-urban fortress, icon of corporate greed and excess, and there is now a real possibility that it will be partially or even mostly demolished.

But the Class A office space is performing best. It's the older office space suffering the most.

I would argue that the Ren Cen is an issue somewhat unique to Detroit, and there are other recent history parallels to what is going on there. When Kmart merged with Sears 20 years ago, they left a perfectly good office complex vacant in Troy that ultimately had to be torn down with taxpayer funds last year. There was also another Class A office tower in Dearborn torn down last year that was once owned by Ford. For whatever reason the Detroit area has never really been good at reusing commercial buildings.

[eschaton]

Originally Posted by giallo

That's just crazy to me. I mean, I get it. The cost to keep that building running, even without anyone in it, must be a lot, but to teardown a structure of that size and prominence is just nuts. There's got to be other ways to use it rather than to demolish it.

IMHO, this shows the true folly of modernism.

If form follows function - and it surely does with office towers - there's really no way to adaptively reuse buildings created for a single function in mind. Quite honestly, they were even ill-adapted for that function, as study after study has shown the "open office" concept doesn't work, and was just put into place for convenience/cost savings, rather than productivity.

In some ways, this isn't unlike the issue in Europe of what to do with the oodles of historic churches. Yeah, the biggest and best in the largest cities survive as tourist attractions, but every village has a church in its heart, and rural areas have the same declining church attendance issue that the cities do. So many are knocking down the churches in their heart due to lack of any reuse plan.

It feels different due to the issues of scale. But while it's possible to save something like a church if you work really hard (entire nonprofit agencies have been created just to develop programming/uses for former churches), it's beyond a community to ever figure out how to fill an empty office tower.

[Steely Dan]

Originally Posted by eschaton

If form follows function - and it surely does with office towers - there's really no way to adaptively reuse buildings created for a single function in mind.

Not impossible, just more challenging and market-dependent.

Chicago's Mid-Continental plaza is a big old mid-century office box with giant 45,000 SF floor plates, and the top 12 floors were converted to residential about 15 years ago.

Originally Posted by eschaton

In some ways, this isn't unlike the issue in Europe of what to do with the oodles of historic churches. Yeah, the biggest and best in the largest cities survive as tourist attractions, but every village has a church in its heart, and rural areas have the same declining church attendance issue that the cities do. So many are knocking down the churches in their heart due to lack of any reuse plan.

It's not just Europe. Here in Chicago there are a lot of examples of older, smaller unused churches being converted into residential.

The results can be pretty janky at times, but still usually better than losing the older church structure altogether.

[edale]

Originally Posted by Steely Dan

It's not just Europe. Here in Chicago there are a lot of examples of older, smaller unused churches being converted into residential.

The results can be pretty janky at times, but still usually better than losing the older church structure altogether.

I imagine most older cities have some examples of churches converted to other uses. Cincinnati has this old church that was converted to a brewery and bar about 10 years ago.

[eschaton]

Originally Posted by Steely Dan

It's not just Europe. Here in Chicago there are a lot of examples of older, smaller unused churches being converted into residential.

The results can be pretty janky at times, but still usually better than losing the older church structure altogether.

To be clear, I wasn't talking about urban areas in Europe. I was talking about outlying rural villages. This is a big issue in particular in France, where one is lost every two weeks. Rising secularism coupled with a declining population is a toxic combination for any sort of reuse in much of Europe. This can be particularly an issue, paradoxically, because often the local municipality has to pay for the upkeep, and at some point keeping a medieval relic no one uses (and tourists don't even visit) just isn't worthwhile any longer.

I don't think there's anything similar in the U.S., given our history is much shorter. There's plenty of dying rural towns in the high plains, but the churches aren't particularly old, and even if they're of historic age, they're often fairly simple frame structures, not stone buildings which have stood for ten times as long.

But I do think that in some ways they're analogous, albeit at different scales, to office towers. What do you do when the building which helped to define the sense of place of the core of your settlement is completely irrelevant?

[Crawford]

Germany has an income tax on one's state-registered religion, which then flows to the denomination, so it has thousands of virtually empty Catholic and Lutheran churches in perfect condition, thanks to billions in taxpayer dollars. Their endowments are so huge, they'll survive long after the last Catholic or Lutheran German passes away.

But outside of Germany, I'm pretty sure Europe and much of the Western world has a crisis of empty, rotting churches.

[JManc]

Originally Posted by edale

I imagine most older cities have some examples of churches converted to other uses. Cincinnati has this old church that was converted to a brewery and bar about 10 years ago.

There's one in Pittsburgh and they had a fantastic quad the last time I was there. Quite a few churches in the northeast converted to houses including this one across the street from my grandmother's old house.

[mhays]

The problem with large-floorplate office towers and churches isn't whether it's possible. It's high cost and risk vs the resulting payoff.

Another factor is spaces that are inherently hard/expensive to heat and cool given the high ceilings in both types.

[Steely Dan]

Originally Posted by mhays

The problem with large-floorplate office towers and churches isn't whether it's possible. It's high cost and risk vs the resulting payoff.

Definitely more challenges/costs/risks.

I was only responing to eschaton's comment that appeared to say that repurposing a large floor plate office tower into residential isn't even possible.

It's definitely possible.

But yeah, it's generally a tougher nut to crack than a smaller floor plate pre-war tower.

[edale]

Originally Posted by Steely Dan

Definitely more challenges/costs/risks.

I was only responing to eschaton's comment that appeared to say that repurposing a large floor plate office tower into residential isn't even possible.

It's definitely possible.

But yeah, it's generally a tougher nut to crack than a smaller floor plate pre-war tower.

It'd be interesting to see the floorplans of the Chicago project you mentioned. How do you bring natural light into those middle portions of buildings with vast floorplates?

[Steely Dan]

^ Chicago has generous (or dubious, depending on perspective) borrowed natural light/vent reqs for adaptive re-use projects.

So yeah, local jurisdiction building codes definitely matter here.

[llamaorama]

As a non-expert who just reads this forum and follows this stuff, here's my predictions:

There will be more teardowns in:

1. Highly valuable real estate locations like Manhattan, DC, San Francisco, Boston, LA, etc because redevelopment would be worth it.

2. Highway-adjacent suburban office towers in areas nobody would want to live, especially if the land can be redeveloped into other commercial uses. Already happening in Dallas, Houston, and Atlanta. I think this trend will accelerate a lot.

3. Rust Belt and Northeastern cities, anywhere where the local economy wouldn't support it and where there isn't anyone around with the money to make it happen. Already happened to Flint, Evansville, Bethlehem PA, etc.

4. Places where there's newer nicer residential sort-of-high rises and newer office spaces and what's traditionally considered downtown isn't necessarily the center of activity now. Example would be St. Louis and Baltimore.

There will be at least some conversions in:

1. Sunbelt cities where there is high demand for apartments and condos and hotel rooms but not a lot of new high-rise residential buildings, and this is also the highest and best use of the land in weaker downtown areas after the astronomical cost of demolishing a huge early 1980s banking and oil bubble tower is considered. Already happening in Dallas, Houston, Phoenix, etc.

2. Small cities where people and local leaders want to revitalize the city center and are sentimental about and will allow tax incentives to make that happen. Also where the local economy is strong and there are local investors and real estate developers who would take a risk on a hometown project. Already happening in Buffalo, Waco, etc. I don't know if it's fair to include New Orleans in this category but I imagine it would be place where residential or hotel or even casino uses could take over empty office towers.

3. Isolated freak situations where the cost to demolish a building causes it to hang around a long time as an abandoned relic and ultimately someone decides it sure would be cool to save it and build a boutique hotel. Examples would be like Mineral Wells, TX, Whittier Alaska, etc.

4. Suburban towers in favored-quarter suburbs where the surroundings are suitable for it and the building is also a tall outlier. Already happened in Albuquerque, Oklahoma City, etc.

[craigs]

LA has seen a lot of office-to-residential conversions in the last 25 years. At first, it was all downtown as thousands of homes were created in pre-war office buildings. But lately, the conversion action has been centered more on post-war office buildings in areas like Koreatown. These are 10-, 15-story office buildings with more reasonable floor plates than the downtown behemoths, and located in busy secondary or tertiary business districts with good transit, dense residential nearby, and lots of restaurants/bars. Those kinds of districts have the demand necessary to justify residential conversions.

[chris08876]

Issue with conversions tend to be the strict, in some cases, regulations for conversions. Say office to residential. All adds to the cost, why sometimes those projects can be so expensive. Everything from window placement to the whole access/egress orientation. Varies per code and area. Some have stricter codes than others.

Frankly with remote work, I'd like to see a lot of those suburban office parks go the way of residential.