Repurposing Commercial Real Estate For Residential
In urban areas, like DC, one potential source of new residential real estate may be vacant commercial space. Converting older commercial real estate is not exactly a new idea, as older industrial-type warehouse buildings have been successfully converted into loft-like apartment units in many markets.
But converting space that once held, or might have held, cubicles, is still fairly new.
Fairfax County alone has 20 million square feet of vacant commercial real estate. The Board of Supervisors recently passed a comprehensive plan amendment to allow the adaptive reuse of commercial real estate into schools, child care facilities and other educational purposes. There is talk of other adaptations as well.
The City of Alexandria approved the conversion of the building which held the offices for the Sheet Metal Workers International Association into high-end luxury condominiums, selling for as much as $4 million a unit.
A recent ULI article talks about the different models for converting vacant commercial space into residential. One specific example highlighted affordable and workforce housing:
Workforce/affordable: The Century Building, a 12-story, 80,000-square-foot (7,400 sq m) former office building in the heart of Pittsburgh’s Cultural District, was redeveloped by TREK Development Group to provide 60 workforce and affordable apartments serving households earning 60 to 120 percent of the area median income. The project used an array of funding from local public agencies, federal low-income housing tax credits, and investments from the Pittsburgh Cultural Trust, the Heinz Endowment, and the Richard King Mellon Foundation. The development won a 2012 ULI Jack Kemp Workforce Housing Models of Excellence Award as a national model.
As the report mentions, “Meanwhile, a host of factors remaking office space, including innovations in technology, increases in telecommuting, and preferences for more flexible and collaborative spaces, have made many older office buildings less competitive in their markets and, in some cases, obsolete….In this context, office-to-residential conversions are typically seen as an unmitigated win/win situation for cities. They help attract and accommodate new residents, often in a more environmentally sustainable manner than new construction, while reducing office vacancies—and sometimes saving beloved buildings from a more radical makeover, or even the wrecking ball.”
This could be one potential avenue for future development in an area where land will only continue to be a premium.