Turning vacant office buildings into apartments presents a 'historic' solution to housing crisis, expert says
Big cities face rising number of vacant, for-sale office buildings
Alexandria Real Estate Equities founder Joel Marcus says the push to transform vacant offices into apartment buildings presents ‘a historic opportunity.’
While many workplaces shifted to a remote setting during the pandemic, some businesses never fully returned to in-person models - creating a surging number of vacant, big city office buildings.
But the empty spaces are providing a "historic opportunity" for both private and public sectors to transform them into residential spaces as U.S. markets face pressures between rising inflation and interest rates and low housing inventory, one real estate investor argued on "Mornings with Maria."
"This would be an awfully good solution," Alexandria Real Estate Equities founder Joel Marcus told FOX Business’ Maria Bartiromo Thursday. "And I think a number of cities are beginning to look at this, and a number of private developers have certainly taken this on."
According to the National Association of Realtors, Chicago, New York City, D.C., Los Angeles, Minneapolis and Philadelphia all reported an increase in available office buildings as of February. At the current recovery rate, it would take nearly three years to reabsorb pre-pandemic office space.
HOUSING MARKET IN THE UNITED STATES HEADED FOR MAJOR SLOWDOWN
"There is a glut of older office buildings in the central business district of many big cities. And so we're really looking at, I think, a historic opportunity," Marcus explained. "And I think the cities, states and federal government need to do a lot more talking about this to see if we can really bring these two phenomena together."
Turning vacant office buildings into residential space provides a "historic opportunity" to cities and private investors, Alexandria Real Estate Equities founder Joel Marcus said on "Mornings with Maria" Thursday, October 6, 2022. (Getty Images)
"Imagine if one was able to solve part of the housing crisis by turning many of these older, kind of obsolete buildings in the central business districts into housing," the real estate investor continued. "It would be a wonderful opportunity."
However, the transformation process will likely require complex collaboration between the cities and real estate conglomerates, Marcus noted.
"There's economic efforts to do that, which won't be cheap," Marcus pointed out. "And that's where cities, states and the federal government can provide appropriate incentives to allow that to happen."
The potential growth of supply within the U.S. housing market could also help boost the hospitality and service industry, according to the real estate expert.
"We have to remember, you can't just have residential buildings. You need services, you need groceries, you need cleaning establishments," Marcus said. "So this is a great opportunity also to restore mom-and-pop businesses in some of these important locations."
GET FOX BUSINESS ON THE GO BY CLICKING HERE
Alexandria Real Estate Equities founder Joel Marcus says collaboration between the private and public sector will be ‘important’ in the construction process.
Alexandria Real Estate Equities has already taken part in this innovative concept, its founder added, detailing the construction of a 250,000-square-foot apartment building attached to the Alexandria Center for Life Sciences at Kendall Square in Cambridge, Massachusetts.
"We ultimately sold it off because we don't really operate and manage [apartments], but it was a really great help to the community that was a new construction, not repurposed, but there's a huge demand on both the need on the housing side and the need on the office side to look for a solution that is positive all the way around," Marcus said.