[ad_1]
“Benzinga’s Best Stocks to Buy Today”
There are only two mistakes you can make when investing. One is not investing at all. Next is buying the wrong stocks. Find out which stocks to buy with Benzinga Insider Report, our best weekly stock reports delivered right to your inbox. Act fast to buy our stock picks at incredible discounts! Get your $0.99 limited offer now!
With U.S. office vacancy rates at historic highs, coupled with the housing affordability crisis facing many U.S. cities, many are asking the same question: Is there an excess of vacant office space and a lack of new affordable housing, and why not How about solving both problems by converting office buildings into residential spaces?
The short answer to this question is that making these conversions is harder than it sounds. Having said that, Gensler, an architecture firm with extensive experience in this field, has come up with an algorithm that scores each building based on its strengths and weaknesses in converting into residential space. Benzinga looks at the problems facing the commercial sector and whether the shift from commercial to residential can save it.
Enter to win $500 in stocks or crypto
Enter your email and you’ll also get Benzinga’s Ultimate Morning Updates plus a free $30 gift card and more!
The clock is ticking on commercial real estate debt
America’s affordable housing supply crisis has been analyzed in detail. What it comes down to is a lack of new affordable housing inventory and the growing number of Americans who need affordable housing. The problem in the business sector is almost exactly the opposite. There is simply too much supply, and with millions of Americans working from home, it looks like it may be permanent.
The problem, of course, is that empty buildings don’t make money, and many regional banks across the country are heavily invested in commercial real estate. Nearly $1 trillion worth of commercial mortgages will mature in 2024 when some markets face 30% vacancy rates. Higher interest rates will make it more difficult and costly to refinance much debt.
In many cases, owners will be unable to refinance, and if commercial/office foreclosures break out, several area banks could fail on short notice. If this happened, the potential impact on the economy would be frightening. For bankers and developers alike, it’s this threat, not a lack of affordable housing, that’s driving the repurposing of vacant office space into residential use.
do not miss it:
What makes a building a good candidate for retrofit?
Your Exclusive Benzinga “Insider Report”
Get our best weekly stock picks and analysis delivered straight to your inbox. Gianni Di Poce shares a “major alpha alert” in this week’s issue. do not miss it! Click below for our top picks. Try it now for only $0.99.
Gensler studies the transition from office towers to residential buildings in cities across North America. In an article published in Microsoft Start, Gensler principal Sheryl Shulze discusses the feasibility study she led on a team that is conducting retrofits on several Calgary office buildings.
The company ultimately developed an algorithm that can quickly analyze several different building characteristics and factors to score each building’s feasibility of completing the conversion. Some of the challenges they identified include:
- Many office buildings have windows that cannot be opened, which is a necessity for residential spaces.
- Many large office building floor plans are difficult to divide into units that receive adequate light.
- Buildings smaller than 30,000 square feet appear to be the ideal size.
a recurring theme
Although some buildings are easier to retrofit than others, there is a common theme in nearly all of the feasibility studies Gensler has conducted. Retrofitting is costly, and retaining renovated units as affordable housing may only be possible with significant public subsidies. In other words, partnerships between the public and private sectors will be key to transformation efforts.
Schultz also suggested a more versatile approach that goes beyond just converting office space into residences. In her ideal renovation, the renovated building would have many different spaces that are central to life. Some of the spaces and services she envisions operating in-house include:
- retail
- health care facilities
- Libraries and other public places
It is possible to create an environment where multiple types of operations can take place simultaneously in one building. It would be a win-win situation for possible buildings. However, Schulz believes the groundwork for public-private partnerships in building retrofits must be laid now, because once the crisis begins and buildings depreciate significantly, it may be too late to stem the tide.
Read next:
“Benzinga’s Best Stocks to Buy Today”
There are only two mistakes you can make when investing. One is not investing at all. Next is buying the wrong stocks. Find out which stocks to buy with Benzinga Insider Report, our best weekly stock reports delivered right to your inbox. Act fast to buy our stock picks at incredible discounts! Get your $0.99 limited offer now!
© 2024 Benzinga.com. Benzinga does not provide investment advice. all rights reserved.
[ad_2]
Source link