This could actually work in a city like Boston (almost uniquely in the US). Most of those low/midrise older buildings downtown were likely residential to begin with.
Boston mayor announces residential conversion program for office buildings
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Re: Boston mayor announces residential conversion program for office buildings
#12Earlier quoted context omitted.
It depends. If everything is owned by the same management or equity firm, then no.
The idea that a single firm or even a stable cartel could effectively control prices in a market as large as Boston is just naive.
They can just run a cartel [1].
I don’t understand why anyone thinks things like housing can have any competition when housing is not a commodity but a necessity and the margins are rather thin with little to no space for efficiency and innovation, and private equity can just buy apartments and houses.
> In one neighborhood in Seattle, ProPublica found, 70% of apartments were overseen by just 10 property managers, every single one of which used pricing software sold by RealPage.
[1] https://www.propublica.org/article/yieldstar-rent-increase-r...
Re: Boston mayor announces residential conversion program for office buildings
#13> a rate reduction by up to 75% of the standard tax rate for residential for up to 29 years could provide a strong incentive to encourage conversion. This would be implemented through a public-private partnership that will enable the BPDA, the City, and the proponent to enter into a payment in lieu of taxes (PILOT) agreement This is actually a pretty nice rebate (similar to the one Ed Lee and Willie Brown proposed fo…
Is this as good as I'm imagining? Almost feels like any office developer would be looking at their offices and thinking about it, even if they're currently rented.
Re: Boston mayor announces residential conversion program for office buildings
#14There was a cool OddLots episode recently where they talked to a guy who does Office to Residential work and some of the complexity. One thing he talked about, which I didn't know anyone did, was to actually cut through the ceiling/floorplate of buildings to basically "donut" them. This is necessary because many office floorplans are huge with modern HVAC and when converted into residential you end up with either und…
> This is necessary because many office floorplans are huge with modern HVAC and when converted into residential you end up with either undesirable or illegal apartments due to lack of windows/egress/etc.
Couldn't you just wall off the middle? I mean, you do get another set of windows on the inner courtyard, but it seems expensive to perform such major surgery on a building.
Re: Boston mayor announces residential conversion program for office buildings
#15Earlier quoted context omitted.
It depends. If everything is owned by the same management or equity firm, then no.
The idea that a single firm or even a stable cartel could effectively control prices in a market as large as Boston is just naive.
De facto cartels ... what do you think is going on now around the world, let alone speculatively in Boston.
Re: Boston mayor announces residential conversion program for office buildings
#16This could actually work in a city like Boston (almost uniquely in the US). Most of those low/midrise older buildings downtown were likely residential to begin with.
> almost uniquely in the US
Any east coast city should have an easier time of it, because the main determining factor for retrofitting office buildings into residential is the distance between the center of the building and the exterior, in order to make sure there's enough windows in each unit. Any office building built before the advent of the electric light should be just fine, so there's plenty of opportunity in places like Philadelphia.
Re: Boston mayor announces residential conversion program for office buildings
#17> a rate reduction by up to 75% of the standard tax rate for residential for up to 29 years could provide a strong incentive to encourage conversion. This would be implemented through a public-private partnership that will enable the BPDA, the City, and the proponent to enter into a payment in lieu of taxes (PILOT) agreement This is actually a pretty nice rebate (similar to the one Ed Lee and Willie Brown proposed fo…
Is this as good as I'm imagining? Almost feels like any office developer would be looking at their offices and thinking about it, even if they're currently rented.
Property taxes are a big expense, but not as big as the debt on the construction costs. And you end up with massive additional construction costs for fewer square feet to lease.
So you only can do this if your bank decides to agree to take a haircut... which only happens if the bank is convinced you have no other options.
Reducing the property tax provides a sweetener that you and the bank can share to make it slightly more palatable.
Re: Boston mayor announces residential conversion program for office buildings
#18It's a fine idea if good candidates for conversion can be found, but shouldn't they fix up their dilapidated public transit system before inviting more density into their urban core?
Just today, one of their rail cars caught fire at an elevated station, and their broken fire suppression system did nothing but flood the ground floor when the firefighters tried to use it.
Wu's push for more housing density along the city's functioning arteries feels more realistic. Maybe they're realizing that plan could also suck a lot of property taxes out of the urban center.
Re: Boston mayor announces residential conversion program for office buildings
#19There was a cool OddLots episode recently where they talked to a guy who does Office to Residential work and some of the complexity. One thing he talked about, which I didn't know anyone did, was to actually cut through the ceiling/floorplate of buildings to basically "donut" them. This is necessary because many office floorplans are huge with modern HVAC and when converted into residential you end up with either und…
> This is necessary because many office floorplans are huge with modern HVAC and when converted into residential you end up with either undesirable or illegal apartments due to lack of windows/egress/etc. Couldn't you just wall off the middle? I mean, you do get another set of windows on the inner courtyard, but it seems expensive to perform such major surgery on a building.
Donuted buildings will forever remind me of the Ponte Tower building.
(1) https://www.theatlantic.com/entertainment/archive/2017/02/th...
Re: Boston mayor announces residential conversion program for office buildings
#20> a rate reduction by up to 75% of the standard tax rate for residential for up to 29 years could provide a strong incentive to encourage conversion. This would be implemented through a public-private partnership that will enable the BPDA, the City, and the proponent to enter into a payment in lieu of taxes (PILOT) agreement This is actually a pretty nice rebate (similar to the one Ed Lee and Willie Brown proposed fo…
Yes. Left wing politicians need to remember a rising tide lifts all boats.
We need to stop treating things like zero sum games and that we need to take things away or redistribute finite goods.
Subsidizing things like education, housing, and healthcare.. without corresponding encouraging increases in SUPPLY.. just gives more dollars to the demand side to chase the same stuff.
Yes, typically the market responds, but in highly regulated markets the government needs to make sure they are encouraging rather than discouraging supply.
For example in NYC, an office-to-residential dev was talking about how depending on the neighborhood, there are basically cutoff dates of what construction year is eligible for conversion. In midtown it's something like 1960 whereas downtown it is the 70s or so. That is - nothing built after that date can be converted. And the dates are fixed, not changed in years, have to be renegotiated in zoning law periodically.
There's no fixed reason for this other than setting arbitrary numbers to limit the amount of conversions to residential.. that is.. reduce the ability to build housing!
When asked why, the developer basically said "it's sort of arbitrary but they do it so that a neighborhood doesn't get too much housing when it doesn't have enough schools or markets, etc".
Which is kind of crazy. Build the housing. Build the schools. Just.. build.