Under what criteria? Also, a large ask, but if you might indulge me: posit circumstances in which it WOULD make more sense to convert.
If office buildings had been built with conversion in mind in the first place. This would require smaller floorplates, more utility stacks, etc., and they wouldn't be as profitable as office buildings built without those constraints, but you would at least have better future flexibility in what kind of use the building gets.
But you can't just ignore that existing office buildings are not remotely like residential buildings, and would be extremely expensive to convert. So I suppose the criteria you might say is profitability; if a conversion won't turn a profit, no developer is going to do it.
No, respectfully, that's a cop-out. I'll give an example: New Jersey gets nuked; residents are successfully evacuated, but now they all need a new place to live, and suddenly it makes to do makeshift retrofits of Manhattan high-rises to house them, if temporarily. That's obviously at the far end of the spectrum. I'm looking for the line where we cross from "untenable" to "tenable".
In what scope? Something that might not be profitable for a single company could be value-generating at a national level.
> as the conversions are extensive and costly and still don't yield units that are as good as purpose-built residential apartments
I understand that you've decided this. I'm saying that it's not a given, and asking you to free your mind a bit. How could the conversions be less costly? What compromises in design would people actually be willing to live with? What external conditions might lead to conversions making sense (including ones where potential profit is not the primary purpose of the build).
I GET that the people investing in real estate right now don't want to build anything but what they want to build. We're not obligated to confine our imagination to their ideal balance sheet.
If maintaining the property value is a better move in your risk analysis, over making income from renters. Maintaining the value of your $100M+ tower makes a lot of sense if you are expecting commercial real estate to turn around soon. If you convert it, it will probably never be able to sell for more than a fraction of that and investors get hosed.
>posit circumstances
Massive deregulation in what qualifies as legal arounding housing would be one major chip. The other would be massive devaluation (which probably depends on the former point), such as massive amounts of housing going up in neighboring areas.