Office Conversions Play a Role in Reinvigorating Cities’ Core

The pronounced effects that the pandemic had on the working and living trends for much of the country highlight reasons why reinvention is needed in many metros, according to a new report from CBRE.

Disruption by the COVID pandemic in the early 2020s brought 30 years of urban renaissance to a halt, according to CBRE.

Helping cities to thrive are economic dynamism, demographic potential, lifestyle vibrancy, distinctive identity, responsive governance, and resilient infrastructure.

The report identified 68 such vibrant mixed-use districts in 19 markets. Those were categorized into four archetypes based on economic, demographic, and urban development factors.

Super Cities: Los Angeles, New York

Mixed Majors: Boston, Chicago, Philadelphia, San Francisco, Seattle, Washington, D.C.

Sprawling Darlings: Atlanta, Dallas, Denver, Houston, Phoenix

Developing Destinations: Austin, Charlotte, Miami, Nashville, Orlando, Tampa

These cities need a “reinvention,” which will come through conversions or demolition of older, underutilized real estate, according to its “Shaping Tomorrow’s Cities” report.

The amount of conversion activity underway is not yet enough to be fully transformative in most cities, but data shows that targeted conversion activity can be a catalyst for broader change.

“Reinvigorating city cores will be no easy task, but there are roadmaps for every city to consider,” Julie Whelan, CBRE Global Head of Occupier Research, said in prepared remarks.

“Vibrant mixed-use districts provide a blueprint for vitality that cities can strive to foster in other neighborhoods.”

A key strategy for revitalizing cities struggling with high office vacancies and related challenges is to fortify those mixed-use districts and to encourage the development of other property types in office-heavy districts, according to CBRE.

One approach is to convert obsolete office buildings to other uses, namely apartments, and to renovate or redesign some into improved office properties.

CBRE found that there is 43.5 million sq. ft. of mostly vacant office buildings that could be candidates for conversion to other uses or upgrade to better office properties. That could yield up to 43,500 residential units across those districts if all buildings were converted.

Beyond that, revitalization efforts could target obsolete buildings in cities’ nonprime business districts, which collectively account for 58% of total office space in the 19 cities analyzed.

CBRE suggests that public and private stakeholders should have an integral role to play in shaping American cities.

“By having an all-hands-on-deck approach, the collective impact of experiences and rich data will drive insights and strategies to transform our cities,” the report said.