Published
June 22, 2023
Almost half of real estate experts believe government regulations limit the ability to transition office space into residential units, according to the U.S. Chamber of Commerce’s Future of the Office survey.
The data comes as more urban areas and smaller cities are considering converting empty office space to other uses to revitalize downtown neighborhoods and add much-needed housing.
But the conversion of offices to housing is more complicated and expensive than it seems. As the survey reveals, some of the barriers are physical—like layouts and floor plan configurations—but some are in the control of local governments, especially zoning/permitting and environmental regulations.
The Chamber’s surveys finds that almost 46% of commercial real estate professionals indicate zoning/permitting is impacting their ability to convert office space into other types of real estate, with nearly one in four (23%) saying it is the most important factor.
More than two in five professionals (44%) indicate environmental regulations are a big factor preventing the conversion of office space.
Permitting Reforms Could Spur Conversions
The hurdles have already led some states to try to promote conversions by waiving development impact fees, introducing tax incentives, and streamlining zoning changes to spur office-to-housing conversions.
“As our exclusive survey reveals, cities who want to adapt and thrive will look to reform their zoning, permitting, and environmental reviews to make it easier to convert what would otherwise be vacant office space to retail, hospitality, entertainment space, or housing,” said Neil Bradley, Executive Vice President and Chief Policy Officer at the U.S. Chamber of Commerce.
The U.S. Chamber is calling for permitting reform as part of its Permit America to Build initiative, urging Congress to act on modernizing our nation’s outdated permitting processes before the end of the summer.
The Chamber survey found seven in ten builders (71%) and two in three architects (68%) are receiving more frequent requests to convert existing office space to a different use compared with one year ago.
While conversion to housing is one possible use for empty offices, more than half of architects surveyed (54%) say that converting office spaces into other commercial uses will be a trend in the coming year.
Meanwhile, one in five builders (20%) believe converting office spaces into residential housing units will be the most influential trend in office design in the next year.
Trend: ‘Open’ Office Spaces Customized for Flexible and Hybrid Work
The industry professionals surveyed think that more flexible, open, and hybrid-centric office spaces will continue to be a growing trend in office design in the coming years.
Most see a sea change in long-term trends in office space design. A majority of those surveyed say flexible workspaces (65%), improved ventilation (63%), and work-from-home/hybrid spaces (61%) will be hot trends over the next five years.
They also see other trends affecting the future of the office. For example, a majority of commercial real estate professionals believe that improving office air quality (58%), spaces that accommodate social distancing (52%), and spaces which allow for coworking (52%) will be influential trends in office design over the next year.
About the authors
Thaddeus Swanek
Thaddeus is a senior writer and editor with the U.S. Chamber of Commerce's strategic communications team.
