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Could Vacant Office Spaces Across the US Be the Solution to a National Housing Problem?

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A city skyline with high rises and a blue sky, cars driving in foreground on a bridge.
Cars drive by the San Francisco skyline along Interstate 80 on Oct. 27, 2022. According to a report by commercial real estate firm CBRE in 2022, the city of San Francisco had a record 27.1 million square feet of office space available as the city struggled to rebound from the COVID-19 pandemic. (Justin Sullivan/Getty Images)

Across the United States, empty office buildings are leaving once-bustling downtown areas with less foot traffic and are forcing experts, residents and officials to figure out what exactly will happen with these vacant structures.

recent study from the real estate firm Cushman & Wakefield found that about a fifth of U.S. office space was vacant as of the end of last year. The vacancy rate varies, with cities like Los Angeles, Houston and Cincinnati hovering around 25% and cities like Savannah, Georgia, and Naples, Florida coming in under 5%.

The high vacancy rate is about more than just the shift to a work-from-home culture because of the COVID-19 pandemic, according to David Smith, the head of Americas Insights at Cushman & Wakefield, who authored the study.

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“It’s really four factors over the last few years that have impacted office occupancy,” he told NPR. “One is we’ve had a lot of economic uncertainty going back to 2020 and early 2021 and then, again, certainly over the last year as interest rates have risen.”

Smith also factors in remote and hybrid work, the surplus of new constructions more appealing to office seekers and a pivot to subleased space to help offset the costs of owning office real estate.

Despite these challenges, Smith is optimistic that vacancy is reaching a peak and that a return to office spaces is imminent for two main reasons.

“One is we expect to see job growth accelerate when we head into 2025 and beyond and that office-using industries, in particular, will take up a disproportionate share of new jobs that are created,” he said.

“And two, we’re tracking several hundred different companies and their policies around in-office work. And all of them, if they’ve changed their policies over the last couple of years, are actually moving towards having people in more.”

An uncertain return to the office

The debate around return-to-office policies has been playing out for well over a year now as bosses and workers navigate what a post-pandemic world should look like.

Across the private sector, in-office requirements were becoming stricter, NPR’s Andrea Hsu reported in September, echoing what Smith’s policy tracking has found.

“What we’ve found is, people have enjoyed coming back to the office,” Zoom’s chief people officer, Matthew Saxon, said last year. “There is a buzz. There’s something about being able to go have lunch with your teammates.”

Zoom is just one company on a growing list that is veering away from remote work by bumping up weekly mandatory days in the office for employees. Some other companies have started requiring employees to move near office hubs and have begun eliminating fully remote positions.

This is despite some workers reporting higher levels of job satisfaction, work-life balance and productivity when given the choice between working remotely or in the office, and some researchers saying that an in-office presence has not helped big companies make more money.

A possible pivot away from office space altogether

As the U.S. faces a well-documented housing problem and as office-building landlords face a vacancy crisis, some people have begun exploring whether there could be a mutually beneficial resolution for the two groups — converting empty buildings into residential housing.

Left: The 100 Van Ness building in San Francisco, which was built in 1974, was converted from office space to residential apartment units in 2012. Right: The kitchen and living space of a converted apartment unit at 100 Van Ness, on June 30, 2023. (Martin do Nascimento/KQED)

San Francisco officials, for example, relaxed rules for some office-to-residential conversions. In Washington, D.C., the mayor proposed bigger tax breaks for office conversions.

Yet converting spaces has proved expensive, complicated and time-consuming, with the process often also steeped in bureaucracy. It’s also harder to do for buildings constructed after 1950, according to Robert Fuller of the architecture firm Gensler.

“A lot of the kind of older prewar office buildings have already been converted and tend to work fairly well,” Fuller told NPR last year. “What we’re seeing now is a flood of buildings built in the ’50s, ’60s, ’70s, ’80s that were much deeper. The advent of air conditioning and fluorescent lighting allowed these much larger floor-plate buildings, and those tend to be a little bit more challenging.”

That’s because the center is often darker and doesn’t get sunlight, which makes conversion into homes harder.

As for Cushman & Wakefield’s Smith, he said the office will continue to be part of the U.S. landscape for decades to come.

“I think the long-term trajectory is that the office is a central part of the economy,” he said.

“I think this is an opportunity for the office market as well to redevelop itself. And actually, in 10 or 15 years, we’ll look back and the office market will have revolutionized itself in a really exciting way.”

The interview with David Smith was conducted by Sacha Pfeiffer, produced by Alejandra Marquez Janse and edited by Sarah Handel.

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