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High prices and record mortgage rates drove thousands of homebuyers out of the housing market and exacerbated America’s affordable housing crisis; however, a solution could be waiting in office buildings.
In the past year, home prices have skyrocketed above $450,000 on average and mortgage rates have hit 7.1% per year, wiping out a good chunk of affordable housing in the country.
However, for Alexandria Real Estate Equities CEO and investor Joel Marcus, a potential solution lies in one of the most characteristic real estate phenomena of the pandemic: the abandonment of offices.
“I think this is a monumental opportunity for this country to inventory the oldest office buildings,” Marcus said in an interview with FoxBusiness.
“Almost 996 million square feet by checking account that can go to a housing stock, because it is already there and just needs to be remodeled”, he added.
What Marcus proposes would seek to take advantage of the dozens of office buildings that were left empty during the pandemic and that were no longer occupied, based on the adjustments that many companies had to make during and after the health crisis.
The CEO believes that those unused office spaces could convert to multi-family housing that will only need the arrival of investors who carry out remodeling to adapt them to basic housing needs.
“We have a housing shortage in this country, not only because of affordability, but also because of a lack of locations and regulations to build houses,” Marcus recalled, noting that his plan could provide an answer to the problem.
And he added that they could potentially also function as an engine for the housing sector in the United States, by attracting investors who are willing to spend on renovations and new buyers who have been left out of the market due to a lack of affordable options.
Where the redevelopment plan would work best
However, the plan proposed by Marcus is limited by the fact that he needs the basic element of vacant office space to transform it into multi-family housing.
This means that, in smaller cities and suburbsin which there are not so many abandoned office buildings, it is likely that the investment project will not find a fertile scenario.
However, in large markets, precisely in which the price of housing has skyrocketed in recent years, it could work, given the existence of the basic element: abandoned offices.
Marcus believes that a transformation process like the one proposed could be useful in cities like Seattle, Portland, San Francisco, Dallas, New York, Boston and Atlanta.
Finally, the investor pointed out that there are also technical challenges for turn office spaces into living places; as well as requirements for the change of use of the properties, but he added that both are perfectly affordable.
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