In today's market, it's easier to sell condos or rent apartments than it is to lease office space—and multifamily developers are taking note.
So are commercial property owners, tired of empty office suites. “Any underutilized building is a candidate for adaptive reuse,” according to Paul Ticher, a partner at Cox, Castle & Nicholson, a Los Angeles law firm that has advised numerous adaptive reuse projects. “Commercial owners think like commercial owners, but they need to think of other alternatives now.”
In cities such as Dallas, Minneapolis, New York, Philadelphia, and others, those alternatives include transforming empty office buildings into apartment and condo properties. “Ask yourself, ‘Would anybody want to live in this neighborhood?'” Ticher says. If the answer is yes, that's a very good place to start.
It isn't always where you might expect. While “a building in a constrained, 24-hour environment like downtown New York City or San Francisco is good,” says New York adaptive reuse pioneer Jimmy Kuhn of Newmark Realty, the success of projects such as Cloud 9 Sky Flats, a suburban Minneapolis project far from the urban center, proves that offices-turned-residences don't need to be downtown to work.
“It all depends on how much you want to spend and what you can sell it for,” Ticher says. “Just like any other project.”