CBRE data shows that US office stocks have been dropped as some buildings have been converted to residential or other uses and others have been demolished.
Joe Burns explains the trends in smart city dives. “Of the 58 markets tracked by CBRE, 12.8 million square feet of space is expected to be converted to other uses this year. Office conversions in the pipeline this year reached 1.9% of all office inventory, and since 2020 the number of conversion proposals has increased each year.
Older buildings that are not suitable for conversions account for more than half of demolition and 35% of conversions. “The size and location of the building, increased construction costs, lower labor force, and sustainedly high interest rates also add additional obstacles, taking into account decisions to convert or demolition.”
Office buildings’ conversion to life sciences peaked during the pandemic, but has since declined. Currently, hotels make up the second most popular type of office conversion at 8%.
Cities with zoning reforms that support adaptive reuse have seen high conversion rates. “Currently, 10.3 million square feet of conversion space is ongoing or planned in Manhattan, leading the country,” CBRE said. San Francisco, with an office vacancy rate of 28.4%, recently created a revitalization fundraising district in downtown to encourage conversions.
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