99% Invisible - 551- Office Space

Episode Date: August 29, 2023

In most big cities, there’s a housing crisis. And empty office buildings are creating a different crisis known to urbanists as a ‘doom loop.’ Converting an office into housing can solve both of these crises at once, using one piece of property. This solution just seems so obvious and elegant. But for all the hype around this idea, there are surprisingly few adaptive reuse projects actually underway.Office Space

This is 99% invisible. I'm Roman Mars. Last spring, the mayor of New York City, Eric Adams held a press conference at a construction site in Lower Manhattan. Thank you, thank you so much. He was there to promote a major pillar in his housing plan. We must be a city of yes. We have to think differently, and we have to lean into how do we have a different approach to housing. Adams was wearing a hard hat and a windbreaker that said, Mayor Eric Adams on it. And he wasn't speaking at any regular old construction site. That's producer Chris Barube.

Mayor Adams was giving his speech in a former office tower. A few years ago, this building was filled with cubicles and polymer desks and copy machines, and most importantly, thousands of white collar workers. But during the pandemic, the workers stopped coming in, and this 24-story building set largely empty. So today, the building is being renovated, and by next summer, it's going to be filled with over 500 new apartments. Right now in Manhattan 18% of office space is vacant. At the same time the city of New

York has a major housing problem with more than 100,000 people using the municipal shelter system. So Eric Adams and city officials are talking a lot about taking those empty offices and filling them up with people. The bottom line is we must make it easier to convert office buildings like the one we just told into housing for New Yorkers. It makes it clear what we can do with more of our vacant office building. You know, we're talking about millions of square feet of office space. The Adams administration actually launched a task force to look into this idea on a big

scale. Leading the task force is Dan Gerardnick. He's the director of New York's Department of City Planning, and he's excited about the concept. Everybody knows either it's themselves or their friends or family who are working differently than they did before the pandemic. Everybody knows somebody who's paying way too much for rent, can't find a suitable apartment

for them or their family. Using those office buildings as a way to take a dent out of that problem, it makes a whole lot of sense. New York is not the only big city where this is happening. There's talk of office to housing conversions in Chicago, and LA, and Philadelphia, and Atlanta, and Toronto, and actually pretty much every big city in North America. Office to housing conversions are a hot idea right now.

They've always been a favorite hobby horse for urbanists, but after the pandemic, the idea hit the mainstream. And hearing about it, I have to admit, I got pretty excited, because things they are not good at right now. In most big cities, there's a housing crisis, and empty office buildings are creating a different crisis, known to urbanists as a doom loop. That's when empty office towers have this domino effect that lead to lower property taxes, which hurt city services, and they kill life downtown, which affects other businesses, it sounds bad.

Doom loop! Converting an office into housing, well, it solves all these problems using one piece of property. I mean, this solution just seems so obvious, so elegant. But for all the hype around this idea, I discovered there are surprisingly few projects actually underway, and many developers just don't want to get involved.

I had to find out, why not? Architects, urban planners, and super fans of office conversions talk a lot about adaptive reuse. That's when you take a building and use it for something different from its original purpose. Proponents of adaptive reuse love to sites to brand and his book and BBC miniseries how buildings learn. What I'm really interested in is not architecture, it's buildings. The problem with architecture is that it's allergic to time, because architects keep being asked to create lasting monuments frozen in time.

The buildings have no such presumption. Buildings live in time, the same way we do. One of Brand's big ideas is that all buildings are predictions for what the future will be like, and those predictions are usually wrong. The basic functions and uses of most buildings change in pretty radical ways over their lifespans. A learning building is one that keeps being improved and refined until it reaches an adapted state.

But an adapted state is not an end state. Even the best of buildings has to be refreshed and challenged from time to time or it becomes a beautiful corpse. Even the best of buildings has to be refreshed and challenged from time to time or becomes a beautiful corpse. Big cities have a lot of these beautiful corpses at the moment. And fans of adaptive reuse want these buildings to become housing. And that's because the greenest building is one that's already built.

And for this kind of office reuse, you have the potential to create new housing without riling up the people who already live close by. It's appealing too because, you know, if we were to convert a lot of downtown offices in particular into housing, that doesn't raise a lot of the concerns around gentrification and neighborhood opposition that you would get from building new housing.

Emily Badger is a reporter for the upshot at the New York Times. And fundamentally, at the end of the day, we're really not sort of changing the fundamental nature of how a property or a block or a neighborhood looks to people who are walking by. You're just sort of changing the activity that's happening inside of the building.

New development without riling up neighborhood opposition, I mean, that sounds great. So is it really possible the future of housing has been right there this whole time, towering between a parking lot and a sweet green? I wanted to find out and to see an office to residential conversion up close. Hey.

Hey, Joey. Hi, Joey. Hey, I'm Chris. I'm here to meet you. I've got to tell you how I'm doing. Hey, welcome Chris. I actually got to visit the same building in New York's financial district where Eric Adams did his press conference. It's a construction site on Water Street in Lower Manhattan. And from the street, you can see the facade changing. The old curtain glass on the outside is being replaced by these big windows separated by light grey sills.

Getting there, I realized pretty quickly, an active construction site is maybe not the best place for a podcast interview. I also discovered I'm afraid of open wall elevators. Oh, and I had no idea how to fasten the hard hat. This is embarrassing, but what do I have to do with the hat to get it to sort of stick in? Am I doing okay? I'm sorry. I had a fastened the heart hat. This is embarrassing, but what do I have to do with the hat to get it to sort of stick in? Am I doing okay? I'm sorry. I had a little loose.

It feels like yeah. After establishing my obvious experience on construction sites and my total comfort with the situation, I sat down with two of the people leading the Water Street conversion effort. They're actually part of the same team who owns the building back when it was an office tower. The two anchor tenants were insurance and health and medical companies. So it was two to three thousand people coming in daily.

This is Malik Hajar. Malik is the project manager for this building. And before that, he was the property manager when it was still an office. He's older, you know, 1980s, 90s cubicles, and with the corner offices and the carpet and the fluorescent lighting. And it is just, it's hard to even picture that this was even here before. Malik says he misses the old office tenants, but he's excited for the new apartment stove

and up. He's actually planning to live here after the construction is finished. I will live here. You're going to live here? I've been here for six years. I got to see it through when it's done. Yeah. Wow. Okay. You got to stand by your product. Malik and his colleague Joey Schollelli work for a development company called the Van Barton Group. They also developed the property next door, which used to be offices, and now it's residential. And they're hoping to do lots of conversions like this in the future. They work on all kinds of construction projects, but they don't talk about this building

like a regular construction project. They talk about it like a mission. What we're doing here is impactful, it's huge. That's Joey. And doing our part for the overall greater good and the sustainability goals and environmental goals for the city. So in terms of what you have where we're going we are now we're going to a finish unit or something that we'll go down to the third floor and we'll go to our finished. In theory these conversions make a lot of sense but walking around the water street construction site it became obvious to me these projects

are more complicated than swapping out one kind of tenet for another. And for all those folks who just want to take empty office towers and fill them with condos, they really have their work cut out for them. In how buildings learn Stuart Brand talks about, for a building to be long-lasting, it needs to be flexible. A great example of this are old Victorian townhouses in San Francisco. Stuart Brandt talks about how these townhouses often find second lives as apartments. On each floor, there are three to six rooms, so the houses are easy to divide into two or three flats, one per floor.

The rooms are modest in size and unspecified in function. These houses offer boundless flexibility. An office building by contrast does not have the same boundless flexibility. At the Water Street site, there were all these bare wires and steel beams everywhere. It looked like they were gutting the building. It's definitely a massive, massive undertaking. New York Times reporter Emily Badger. You know, if people who are advocating for this are envisioning,

you know, we just need to throw up a few more walls and install some new toilets. Like, that is not at all what we're talking about. Office conversions are a ton of work because most office buildings aren't designed in the same way you design an apartment building and that means you have to do a lot of renovation. For example, you need to have like 50 bathrooms, 50 small bathrooms on a floor where you used to have like two very large bathrooms. So like you only have bathrooms and

plumbing in one location and now you need to distribute it throughout the rest of the building. To fix this, developers have to redo the plumbing. And of course, they also have to reckon with parking. Maybe now the municipality says you have to have a certain parking requirement because it's an apartment building and do you have the capacity to put parking garage space in the apartment building and like, do you have the capacity to put parking garage space in the basement? So no, sadly you cannot just throw up walls in collided day.

The Water Street development was a clear reflection of how much labor was required for these conversions. The inside is a new building. Everything is brand new. We've replaced everything and we took it down to the structure. Brand new building on the inside and it'll look brand new on the outside as well. I mean, in that case, I know it's a conversion.

I know it's an adaptive reuse, but is it? Like, it sounds like it's a new building. True. Joey confirmed to me they could reuse the foundation and the concrete floors and I mean that's pretty big but most everything else is new. He did add this project was still cheaper than a totally new building. The amount of material that would be required and time to reconstruct the structure itself, all of the concrete and the steel.

It's really utilizing those same bones that are good bones, reusing those and just changing everything else. The developers took me down to a model apartment and I have to say it was really nice. Beautiful views, just all new amenities, the only indications it was an old office building were the high ceilings and the very big doors. We went with eight foot doors. Really nice. Those are tall. Those are tall.

Those are tall. Those are tall. Those are tall. Those are tall. Those are tall. Those are tall. Those are tall. Maybe the biggest complication when you're doing an office

to apartment conversion is the floor plate. Architects use the term floor plate to describe the size of the area inside the walls of each story of the building. So you know, the size of the floor. And there was a time when a residential floor plate and one for an office building were basically identical. It used to be the case, you know, 100 years ago, that we built office buildings in America that were shaped very similar to apartment buildings. You know, they were, they were, they were very narrow,

you know, many of them were like rectangular in shape. At the time, most of these buildings were relatively narrow because all light and ventilation came from windows and every office worker needed to be close to one. So these really old office buildings that were sort of built with these same constraints that residential buildings are built with today, they make for great conversion prospects because fundamentally the shape of them is similar. But post-World War II, offices got some upgrades,

like air conditioning and fluorescent lighting. And suddenly office workers didn't need to be sitting next to a window all the time. So office floorplates got a lot bigger. Today, office buildings tend to have much wider, deeper floor plates than apartments, which means there's a lot of interior space that's pretty far from a window. And that makes conversions really complicated, unless you want a bunch of apartment units with zero access to natural light.

Many cities including New York have a legal requirement that bedrooms have access to operable windows. Like you literally have to be able to open it and get fresh air inside. This means developers working on office to apartment conversions are left with a bunch of empty space in the middle of these buildings. Some developers just put amenities in there, like gyms or media rooms. So like the game room will be located somewhere like that, but I mean you don't need like 20 floors of game rooms in the modern apartment building, but that's sort of fundamentally at the center of this conversion problem is like what do you do with space that's just not a nice place to live?

At the Water Street site, Van Barton had a different idea. They would take all that interior space and just wall it off. So what you'll see inside is we cut out a series of three voids, so they're basically blind shafts into the floor plate. A blind shaft is this void in the center of the building that's inaccessible to tenants. The voids are actually useful for Joey and his company because zoning limits the square footage for an apartment building. But the voids don't count, so they can take that unused square footage and just build new floors on top. If we deducted it here, we could then reallocate it elsewhere. So we took this kind of unusable, very much less valuable space at the back end of a unit from there, and took it and put it up

at the top of the building where it's much more valuable. Okay, some builders are willing to put in the effort and do something with this unusable middle space and adapt the building for reuse. I mean, come on, what's a few voids between friends? Even if a builder makes it this far, they're going to find a whole new set of problems. And that's a big ol' pile of red tape. Converting a building from an office to an apartment because it's a use change sort of triggers your need to now comply with like a totally different regulatory regime than the one under

which the building was built. It kind of goes without saying, but office buildings follow a different set of rules than housing. You know, we just have all of these rules that govern the built environment in cities. And you know, those those rules often don't envision converting offices into housing. And so it turns out to be incredibly difficult to convert from one used to another

and do it in a legal manner. There are many bylaws and rules that keep people alive, like firecoats. We like those. But New York has a very particular hurdle that's preventing conversions. In big parts of the city, commercial buildings constructed after a certain year

are not eligible to be fully converted into housing. Here's Dan Gerotnik. In New York City, for most buildings, that date is 1961. If you were built before 1961, and you're in a zone which allows for residential, you can convert. And if you're not, you're out of luck. This rule is known as the Cut-Off Year, and the Cut-Off Year is in place because I mean, I, you know, somebody must have had some good reason at some point.

When I first read about this, I did not really understand why New York has this role, and to be honest, I still don't. This is an argument that was given to me by someone which I don't find very convincing, so it's not going to be very convincing to you either, but we don't want developers sort of building things where they're telling us it's an office building, but they're really planning for it to be a residential building in five years. And I actually am not sure what the problem with that is. There are neighborhoods in New York that have exceptions, like the financial district, where the conversion deadline is 1977 instead of 1961.

But in most of the city, conversions are just really hard. Joey Scholelli told me these rules make it very, very difficult to even find candidates for these conversions. There's a lot of product that was built after 77, and definitely after 61, that is now in this kind of gray space, a lot of 1980s builds. We owned a building right across the street, 175 water. That other building was built after 1977, which is the cutoff year in this neighborhood. So the conversion didn't happen. The cutoff year is this confusing piece of bureaucracy.

But in August, the city announced a plan to change this rule, to move up the cutoff year in the hopes it would spur more conversions, especially in Midtown Manhattan. While New York developers are waiting for changes to the cutoff year's rule, there are other rules about apartments that no one wants to do away with. In fact, most of the red tape around apartments comes from the era of dangerous tenement buildings in the 19th century. In big cities like New York, new immigrants would move into unsanitary apartments without access to sunlight and fresh air and toilets. New laws were adopted in the early 20th century to protect poor renters.

Again, we like these regulations. In many ways, New York is a special case. Like, other cities just do not have this weird cut-off year thing. But every city has its own set of issues, and its own set of onerous rules when it comes to converting offices into apartments. In many communities in California, the seismic requirements that you are expected to meet for an apartment building are different and more stringent than they are for an office. And so if you want to successfully convert a building, you literally have to reinforce the entire structure

of the building to make it more structurally sound in the event of an earthquake. Or in places in the south where there's a lot of concerns about hurricanes, now you need to comply with the wind load ratings that we expect of buildings in 2023, not in 1961 that building was built. And now you have to completely redo the glazing and everything on the building like that's adding an enormous amount of expense.

I noticed something else about office conversions walking around the Water Street construction site. It was while Joey was excitedly telling me about all of the amenities he was planning for this building. We're going to have a two-lane bowling alley, a sportsbook room with a giant 12-foot by eight-foot TV, and then we'll have a very expensive gym, we have a technical gym equipment, we have a spa and hot tub with a cold plunge

and treatment rooms. The amenities sounded great, but the more I heard about them, the more it sounded like this apartment building might be a little out of my price range. I wonder like when this is open, what's it going to rent for? Like, what is the, what are the units gonna be?

So anywhere, you know, it really ranges, I'd say anywhere from maybe 3500 to 4,000 on a studio, to 4,500 to 5,500, I'm up to 6,000500 to $5,500. I'm more up to $6,000 on a one bed. And then a two bed anywhere from $6,500 or $7,000 on up. With all of the expense of making a conversion like this, the units are going to be available at the market rate, which in New York is quite expensive.

In Manhattan right now, the average apartment is over $4,500. I'm sure there's going to be a lot of competition to live here. But right now, New York is dealing with many people who can't afford it. Here's Dan Gerrardnick. Certainly at the lower end of the spectrum, you know, our vacancy rate for the lowest rent units of, you know, under $1,500 a month is less than 1%. We have a real supply problem overall where 50% of New Yorkers are rent burdened, which means they pay more than a third of their income on rent. I guess, like a lot of people, I was hoping all this talk of office conversions helping

to fight the housing crisis meant fighting the affordable housing crisis. Actually, Eric Adams talked about affordable housing during his press conference. We're going to remain the greatest city in the world by building housing and affordable housing, and we must remain a place where everyday people can find housing. One journalist in the room challenged Mayor Adams about his use of the word. You know, we're talking about affordable housing crisis. How does the $3,000 unit help with an affordable housing crisis?

Some people can't even afford to pay $1,000. No, what we have in the city is a housing crisis, a housing crisis. And the goal is to build low income, middle income, and market, so it's not a one-size-fits-all. There's an argument that every new unit of housing is important, and adding any new supply to the housing market is in and of itself a good thing. Joey told me developers would include affordable units if there were incentives or tax breaks from the government. Some politicians have pushed for mandates that all office conversions need affordable units if there were incentives or tax breaks from the government. Some politicians have pushed for mandates that all office conversions need affordable units.

But so far, that idea hasn't gained much traction. Coming into this story, I used to pass empty office towers and think, what a waste. This is just sitting here empty. When I talk to advocates for conversion projects, they had to admit this whole thing is probably going to be a fairly niche industry, including Dan Gerardnick from the City of New York. It's not going to radically remake our communities. These will be one-off opportunities here and there throughout the city.

But ultimately, he's still optimistic. Fundamentally, it is a good policy change, which meets the moment, and that's why we're so excited about it. Office to apartment conversions are an imperfect solution to this unwieldy problem. But that doesn't mean they're bad, or that we shouldn't do them.

I spend a lot of time reporting on this topic and people would often ask me like, oh, so where do you come down at the end of the day? Do you come down on, like, debunking this as an idea? Or do you come down on sort of saying, this is like, this is the panacea, this is the solution to everything. And I just really feel like it's, you know, it's neither of those things. It's something that we should pursue because it makes sense for a lot of reasons.

It's not gonna happen at the scale people would like it to, but that doesn't mean it's not worth pursuing. Cities can encourage more conversions with things like tax breaks and new zoning rules and governments just spending public money to make these conversions happen. But they're not going to happen on their own. Buildings change. That's inevitable. But how buildings change, that's up to us.

The story of New York's last great conversion boom after this. So we are back with Chris Burube, Hey Chris. Hey, Roman. So there's one thing we didn't get to in the story that I want to talk about now. So I know we just talked about all the reasons why conversions aren't happening all that often right now, but only 20 years ago there was actually this kind of mini boom lit in office to apartment conversions in cities across America. Okay, we'll tell us about that. So back in the late 90s, early 2000s, a few American cities had these booms in office to residential conversions. We've actually talked about one of them

on the show. Do you remember the parking episode with Henry Gerbar? During that episode, we talked about how in Los Angeles, they loosened the parking requirements if you wanted to do a conversion of an old office building into apartments and all these developers took advantage and they put up these lofts and it helps revitalize LAs downtown a little bit. And actually something similar happened in New York in the 1990s. Oh, I did not know that. I mean, we knew the LA story, but tell me about New York.

So in the 90s, Lower Manhattan was very commercial, lots of white collar workers, and they started leaving for other parts of the city. And the city was like, OK, well, we have to do something with these empty offices. So they began to think of ways that they could incentivize the market to transform or adaptively reuse

the older office buildings. That's Carol Willis. She's the director of the New York Skyscraper Museum. And she was nice enough to walk me through an exhibit they had back in the spring about lower Manhattan in the 90s. And Carol says a lot of these conversions were happening back then because there was this big shift happening in the financial sector. And Carol says a lot of these conversions were happening back then because there was this big shift

happening in the financial sector. So there were consolidations and all these banks were moving up town to these newer office buildings. And it created this crisis in Lower Manhattan. So downtown really was affected by a real estate recession that caused the value of buildings to go down. The vacancy to be very high 30% or more in empty office spaces. Whoa, okay. I mean that 30% is like bigger than the office apocalypse that people are talking about today. Yeah, we're talking about the office apocalypse and it's 20% right? Yeah. Back then it was, you know, it was 50% worse. 20% right? That then it was 50% worse. So in response, the city brought in these tax breaks and these incentives, and it led to

quite a few older office towers being converted into housing, including some actually kind of iconic New York buildings. One is the famous Woolworth building that in 1913 was the world's tallest building, and it's particularly interesting because today, the lower section of about 28 or 29 floors remains an office building. And the tower, which is more slender than the base, has been converted to apartments. And so there are kind of many apartments.

Yeah, that is a beautiful building. Cas Gilbert. Oh yeah, just totally iconic New York building. Incredible. Now of course, there totally iconic New York building. Incredible. Now, of course, you know, there's some darkness here, like we're talking about the turn of the millennium and 9-11 slowed down a lot of this progress, but the city recovered, and in the end, it's remarkable, like how many people ended up settling in that neighborhood. There's quite a range of housing that became available through this approach of adaptive

reuse. And that housing stock, which added some 20,000 or so units about average of two people per unit and about 40,000 new residents to lower Manhattan really began to change the sense of a residential neighborhood or in that downtown was a place that people lived, whether they were young singles or maybe starter families. So 40,000 new residents in this area of Lower Manhattan, largely because of these

office-to-housing conversions, it made it feel like a completely different neighborhood as a result. And with all the different restrictions we talked about in the episode, you know, that kind of boom is pretty unlikely today, right? Exactly. For all the reasons we talked about during the story, and also a lot of those 90s, Y2K conversions, they were kind of the quote unquote low hanging fruit buildings. They were the older office buildings with smaller floor plates that were more easily converted, and today it's harder to come by buildings like that. So even if we had like incentives and tax breaks and all these other things, I'm not sure it would encourage like a

massive conversion of the newer office towers with the bigger air conditioner floor plates. Right, right. That makes sense. Okay, so I have another question that we didn't get to in the story. If those abandoned office buildings aren't going to become housing, are there any possible other uses for them so they just don't set empty? Yeah, that's a really good question. And actually, while I was making this story, Andrew Rice wrote this article that came out in New York magazine about the New York real estate market and the office apocalypse and all that.

And one of the scenes in the article is this panel discussion where people are talking about alternate uses for these old office buildings. And they're throwing out a few suggestions and one of them is medical centers. So that kind of feels like a different type of office moving into the old office towers, vertical farms, urban farms moving in, schools. I think the wildest suggestion I saw

was somebody was suggesting pet care should move into the old office buildings. Yeah, there's a lot more pets I've seen at least, and so they need care that makes some sense. Although I still think that the problem still stands that you would need, you know, like access to light and air the same way you would for apartments, right? Yeah, I think all of these involve some pretty significant, expensive interventions. But I don't know. We're at this inflection point where there's a lot of empty office

space and there aren't a lot of tenants who are coming back. So I know we have to figure out something and we have to figure out something pretty quickly. Yeah. And if my household is in the indication, people are willing to spend a lot on their dogs. So maybe that's the answer. Roman, do you wanna buy an office tower for your dog?

What are you thinking? Yeah, I think Rayland needs a whole office to roam around. Yeah, she's a busy dog. She could totally use the space. She could totally use the space. All right, thank you Chris, I appreciate it. Thanks, Roman. And one note, the exhibition, residential rising, it has closed at the New York Sk, thank you Chris, I appreciate it. Thanks, Roman. And one note, the exhibition, Residential Rising, it has closed at the New

York Skiescraper Museum, but they have lots of resources on their website. We will link to that at 99pi.org. I love a good building museum, so that's fantastic. 99% Invisible With Produced This Week by Chris Baroube, edited by Kelly Prime, sound mixed by Martin Gonzales, music by Swan Rial, fact checking by Graham Haysha, Kathy too is our executive producer to Laney Hall as our senior editor, Kurt Colstead, is the digital director. The rest of the team includes Emmett Fitzgerald, Christopher Johnson, Vivian Leigh, Jason Dillion, Lashma Dawn, Jacob Multanada Medina,

Joe Rosenberg, and me Roman Mars. This is our last episode with intern Anna Castanero. It was so great to have you. The 99% of his below-go was created by Stefan Lawrence. Special thanks this week to David Garcia. 99% of his was part of the Stitcher and Sirius XM podcast family now had quoted six blocks north in the Pandora building. And beautiful. Uptown, Oakland, California. You can find links to other Stitcher shows I love as well as every past episode of 99PI and 99PI.org.