30% of U.S. office buildings, valued at $1.1T, are obsolete

[Steely Dan]

Originally Posted by TWAK

It would sure help some of CA's housing problems.

well, they're gonna have to be willing to move to the midwest first

[lio45]

Originally Posted by mhays

Thick floorplates CAN work with residential, like those giant floorplans linked above, but rents/prices won't value the deep-interior space very much. Most people won't pay enough for those extra "family rooms" and multi-door or unenclosed third bedrooms to make them worthwhile.

Offices do value that space.

I don't think there'll be shortages of people willing to live in "deep interior space" in exchange for much lower rents in a prime urban location. It's a great tradeoff.

40 year old banker who has to choose between living with roommates in Manhattan like a college kid or have less natural light, it's not a hard choice...

[jmecklenborg]

Speaking of odd floorplates, the former Federated Department Stores HQ (rebranded as Macy's around 2000) in Cincinnati is being converted to apartments. Here is a current office floor...they're going to end up with some oddly-shaped apartment units:

[TWAK]

Originally Posted by Steely Dan

well, they're gonna have to be willing to move to the midwest first

That's not an option for most Californians, and they would rather live in specific places that are the exact opposite of the state. Seems like when people leave their spot gets filled by a new person too, so how about people stop moving here! That humidity is a deal breaker.
They will complain because it's not like CA if they do move and drive up prices. We already ruined Idaho.

[austlar1]

Originally Posted by Steely Dan

they didn't all have small floorplates back then

i mean, this mammoth land monster from 1912 takes up an entire half city block!


175 W Jackson | 1912 | 1.4M SF


source: https://www.chicagobusiness.com/arti...ffice-building


however, i believe 175 W Jackson has two large light wells punched through it, so it's probably not super infeasible to convert it.

but you'd likely end up with A LOT of "light well-only" units on the interior, which would no doubt be much harder to sell/rent.

Here's an aerial. Looks like two huge glassed in light wells that create an atrium effect at the lobby area. https://www.google.com/maps/place/17...!4d-87.6332815

Here's a link with some pictures of the interior of building. https://claycorp.com/project/175-west-jackson

[C.]

Originally Posted by jmecklenborg

I have only worked at home 20~ days since the beginning of the pandemic, most of that being during a lengthy car repair.

The anti-office people are just plain wrong. Unless you're off in some corner of the business dedicated to a single IT project with 3-4 other people, the benefits to everyone being at the same place are massive.

Just today I've had 10+ brief conversations with people in other departments that wouldn't have happened if we were all at home. The controller, a purchasing guy, the new head of plant operations, two customer service workers, a couple guys in the warehouse, etc. I met with a guy at noon who drove three hours to be here - do you think we're going to go with his quote or the other company who never sent someone over here, even though they're local?

Anti-office people? lol

There are a lot of organizations examining their office space needs. The pandemic has proved that some jobs can be done just as good if not better at home. Some of the boomers that were militantly opposed to allowing anyone to WFH are now all for it because they see things can still function. Why bother paying for office space if it isn't needed. Not all jobs of course can be done remotely, but the number isn't 100%.

What's going to be interesting is that some folks that want the option to WFH or go to the office are going to be disappointed when the company decides that an office isn't needed as virtual is more sufficient. Maybe a WeWork office concept will make a comeback for those that really want an office.

[Steely Dan]

Originally Posted by TWAK

They will complain because it's not like CA if they do move and drive up prices. We already ruined Idaho.

there aren't enough people on the freaking planet to "ruin" the midwest.

Land: it's the one thing they'll never make any more of. except in the american midwest, where it's infinite.

[TWAK]

Originally Posted by C.

Anti-office people? lol

There are a lot of organizations examining their office space needs. The pandemic has proved that some jobs can be done just as good if not better at home. Some of the boomers that were militantly opposed to allowing anyone to WFH are now all for it because they see things can still function. Why bother paying for office space if it isn't needed. Not all jobs of course can be done remotely, but the number isn't 100%.

What's going to be interesting is that some folks that want the option to WFH or go to the office are going to be disappointed when the company decides that an office isn't needed as computer software is more efficient.

This is going to be especially true for state governments who can save a ton of money on having people WFH.

Originally Posted by Steely Dan

there aren't enough people on the freaking planet to "ruin" the midwest.

Land: it's the one thing they'll never make any more of. except in the american midwest, where it's infinite.

Don't tempt us! We might drive up your home's value!

[eschaton]

It's been a thing here in Pittsburgh for quite awhile that basically every "prewar" building downtown is being slowly converted into residential. It helps that we don't have that many big chonky ones which take up an entire city block/have unusable floor plates. Even a few postwar buildings (like the Alcoa building - built in 1953) have been turned into apartments.

The unfortunate thing is the new Class A tends to be within the city, but in areas which aren't as well served by transit, which means car dependency for commuting is likely rising.

[mhays]

Originally Posted by lio45

I don't think there'll be shortages of people willing to live in "deep interior space" in exchange for much lower rents in a prime urban location. It's a great tradeoff.

40 year old banker who has to choose between living with roommates in Manhattan like a college kid or have less natural light, it's not a hard choice...

This isn't theory. It's how apartments are priced based on vast amounts of data.

[SIGSEGV]

Originally Posted by Steely Dan

they didn't all have small floorplates back then

i mean, this mammoth land monster from 1912 takes up an entire half city block!


175 W Jackson | 1912 | 1.4M SF


source: https://www.chicagobusiness.com/arti...ffice-building


however, i believe 175 W Jackson has two large light wells punched through it, so it's probably not super infeasible to convert it.

but you'd likely end up with A LOT of "light well-only" units on the interior, which would no doubt be much harder to sell/rent.

You know, if it was available and in my price range, I would have loved a unit with a "detached" (i.e. down the hallway) office/guest bedroom (in addition to storage). There are some minor complications (e.g. you probably want an ethernet cable or two routed between the two, and maybe some coax, so you don't need two internet plans), but I bet such a unit would be attractive. For an office/guest bedroom, a lightwell is totally fine and the separation is actually nice.

[bnk]

Originally Posted by austlar1

Here's an aerial. Looks like two huge glassed in light wells that create an atrium effect at the lobby area. https://www.google.com/maps/place/17...!4d-87.6332815

Here's a link with some pictures of the interior of building. https://claycorp.com/project/175-west-jackson

There you go. Two light wells. Solves a lot of the problems people are talking about. And It don't think it needs to be 100% condo or rental.

It's large enough for a hotel, retail first floor, restaurants, pools, spas, health club. Something roof top/bar.

Do what they did to the old Post office but make it a mix of these things plus options for rental, condo, and penthouses.


The Price is right for 9M. 9M is a modest 70's ranch in Palo Alto.

This building Just needs an investor group with vision.


Anyone not familiar with one of the largest office block conversions in the USA should familiarize yourself with this very successful enormous 2.5 Million sq feet one. The damn thing is almost fully occupied.

https://post433.com/about/

https://post433.com/

https://en.wikipedia.org/wiki/Old_Ch...in_Post_Office

In September 2019, Uber Freight announced it would be based at the site, adding 2,000 jobs.

After extensive renovations undergone by real-estate company 601W, the building opened to office tenants in October 2019. In August 2019, Uber signed a 10-year lease to become the building's largest tenant, occupying 463,000 square feet (43,000 m2). Construction on the space to be utilized by Uber will begin in the spring of 2020. The structure will also include new Chicago offices for Walgreens, occupying 200,000 square feet (19,000 m2) and housing 1,800 employees. PepsiCo will relocate its Chicago office of 1,300 employees and occupy 192,000 square feet (17,800 m2), while the Ferrara Candy Company announced that it would relocate its headquarters to the Post Office building in 2019, occupying 77,000 square feet (7,200 m2) and bringing nearly 400 jobs. The Federal Home Loan Bank of Chicago will also be a tenant.

...

[lio45]

Originally Posted by mhays

This isn't theory. It's how apartments are priced based on vast amounts of data.

Yes, of course. I was just pointing out to you that there's a price point where the math works in at least the desirable cities, and that "flawed" deep interior space will find takers too--at the correct price point.

In other words, I'm pretty sure that if you are given 175 W Jackson in Chicago for free (including the land), the ROI on a residential conversion (where all the "deep interior space" is discounted to whatever is the price point needed for it to be always rented) is decent.

Conversely, it may not be true of that tallest tower in Missouri, and it's certainly not true of that tallest building in East St. Louis (the Spivey Building).

(Which is why they're are sitting vacant.)

[mhays]

Yes, agreed on that.

[3rd&Brown]

Originally Posted by lio45

Yes, of course. I was just pointing out to you that there's a price point where the math works in at least the desirable cities, and that "flawed" deep interior space will find takers too--at the correct price point.

In other words, I'm pretty sure that if you are given 175 W Jackson in Chicago for free (including the land), the ROI on a residential conversion (where all the "deep interior space" is discounted to whatever is the price point needed for it to be always rented) is decent.

Conversely, it may not be true of that tallest tower in Missouri, and it's certainly not true of that tallest building in East St. Louis (the Spivey Building).

(Which is why they're are sitting vacant.)

There have been a few buildings in Philadelphia that were converted and the center of the building was taken out (i.e. creating a big donut hole straight up into the sky). Thus, there are no units without direct light.

These don't have to be "little" light wells. They can be massive courtyards that become a selling feature.

[R1070]

There has been a great effort in downtown Dallas to convert "obsolete" office space into residential and hotel space. The buildings all have turned out great and it's been a very positive thing for downtown.

[Steely Dan]

And here are some of the big reasons why some older office buildings in the central loop are struggling at the moment. Together, they represent nearly 8M SF of brand new class A office space. Taken with the 2.2M SF old post office redevelopment, that's roughly 10M SF of new office space coming online in downtown Chicago over the past handful of years (and that's not even including all of the new shorter ~20 story office stuff going up left and right over in Fulton Market).

It's no wonder that WFH/hybrid is really putting the squeeze on some older properties that have been losing tenants to these new flashy towers over on the river.



1. Salesforce Tower --- 2023 - 850' - 1.6M SF


Source: https://skyscraperpage.com/forum/sho...postcount=2200




2. 110 N Wacker ------ 2020 - 817' - 1.5M SF


Source: https://www.skyscrapercenter.com/bui...h-wacker/28315




3. River Point --------- 2017 - 732' - 1.0M SF


Source: https://www.skyscrapercenter.com/bui...ver-point/1381




4. BMO Tower --------- 2021 - 727' - 1.5M SF


Source: https://skyscraperpage.com/forum/sho...postcount=1324




5. 150 N Riverside ---- 2017 - 724' - 1.2M SF


Source: https://www.skyscrapercenter.com/bui...iverside/15587




6. CNA Center ------ 2018 - 517' - 0.8M SF


Source: https://www.skyscrapercenter.com/bui...a-center/16024

[JManc]

I think in the coming years, WFH is going to put some serious hurt on the commercial real estate industry. Even the new Class-A towers. Our company which has a load of new and expanding office space is eventually going to go hybrid or total WFH. It might not be right away but I suspect within the next 10-15 years the market will be in for serious growing pains.

[Thebestofeverything]

Originally Posted by TexasPlaya

This is a pretty big issue in Houston where offices were built in waves during boom/bust periods. All those offices/office parks built in the 70s/80s (and there's a lot) have a very hard time competing with the wave of offices built in the 2000s/2010s.

Fortunately, some of the downtown classics are getting facelifts and upgrades, like this classic gothic one:

Iconic downtown Houston office tower renamed TC Energy Center

I wonder what will happen to all of these buildings from the 70s 80s boom? The energy business now prefers to be in the Energy corridor or up in the Woodlands.

[kolchak]

The conversion of post-war office buildings is a greater challenge imo than pre war architecture which has 'vintage' cache. But for cities like Houston there is hope -
https://www.wsj.com/articles/underus...ts-11641301203