Biden wants to help convert empty offices into apartments to ease the housing shortage

Literal work-life balance… US office vacancies are at a 30-year high, and a nationwide housing shortage is creating an affordability crisis. Now a number of cities are hoping to kill two real-estate birds with one stone by converting empty offices into apartments. The White House and local gov’ts are trying to incentivize the conversions and revive America’s downtowns.

• Boosters on: Last month the Biden admin announced a plan to accelerate office-to-apartment conversions that includes $35B in loans. Officials in CA, NYC, and Chicago are racing to provide subsidies and faster project approvals.

• Empty swivel chairs: Despite forceful RTO pushes, office-vacancy rates aren’t cracking. NY warned that its 19% vacancy probably won’t fall till 2026. WeWork's bankruptcy, announced last night, is yet another blow to commercial real estate.

• Slow going: Fewer than 1% (3.6K) of all apt units built last year were created from office conversions. And only 217 US conversion projects are under construction right now.

Converting ain’t easy… You can’t just throw a California King in the break room. Given pricey construction loans, demolition costs, and the logistical nightmare of moving material in urban traffic, office-to-apt conversions are financially feasible in only six cities where high rents can cover costs (including NYC and SF). Local zoning laws and neighbors are additional hurdles. Turning Gotham’s Flatiron into luxury apartments is expected to take three years. Still, the housing shortage has led to bans on short-term rentals (see: NYC’s Airbnb restrictions), while 1B sq ft of US office space sits empty.