Before conversion? The two biggest obstacles are:
* Commercial mortgages make it nearly impossible to change a property in this manner, so you're usually limited to buildings owned free and clear.
* In most cities, zoning/planning would push back on this; I suspect the most interesting part of the Texas story is how they routed around that.
Where bureaucrats actually get to just make the decisions at a high level, rather than everything being second guessed by NIMBYs it's just really obvious what you have versus what you need. If you know your city has an inventory of empty mid-size office buildings sat on the market for months, yet apartments within walking distance of the city centre go for crazy money, it's a no brainer to authorise conversions. Whereas if the last office building was snapped up an hour after going on the market, while residential sales are crawling, a conversion from office to residential is nonsense, tell them to go away.
What really doesn't work is the partial conversion of offices on industrial/commercial parks out of town. It seems to lead to completely incongruous buildings, dumped essentially in the middle of parking lots, without basic amenities such as verges and pavements. Those buildings tend to be flimsy, and it's hard to see the environmental argument for keeping them. I would rather see those sites razed and rebuilt as better quality housing.
1) Office building and space is in demand but the market rate is much lower than the residential rate.
2) The owner of the office building will 'pretend' there is no interest in the property (sometimes for more than a year), so they can plead to the planners that they want to convert th building to residential.
The planners authorise the conversion and the owners make a tonne of dough.
There is no free market in real estate.
that's a contractual issue, rather than an engineering issue. This can be fixed with a stroke of the pen.
If I'm a bank holding a commercial mortgage, it's very finely honed to minimize my risk; as part of that, I contractually limit what can be done with the building.
Why would I, as a lending institution, throw that security away for something much riskier? If the emptying out of commercial buildings that we saw during the pandemic accelerated, that might have provided the incentive. But it seems like that trend line isn't going to continue in force.
I think converting high density commercial properties to residential is a great idea in a lot of cities. But ultimately it's going to be done almost exclusively in buildings that are mortgage free.
Not at all. Your commercial mortgage lender will always help you increase the productivity of your asset. Phone call. Excel docs. Talk terms. Lawyers. Done.
If you don't know this, nobody loaned you $#,#00M and you'll never need this advice
2016 Main was converted from a hi-rise motel into condos years ago, they are pretty nice but there is always the feeling that it's not a complete domestic environment.
At least the plumbing was there.
There's a couple more of these nearby that were left over from the oil crash of the 1980's, which were eventually abandoned after years of reduced energy travel. Looks like one of them has been gutted recently and might be under conversion now.