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In the last two years, office-to-apartment conversions jumped by 25 percent compared to two years prior, according to a report by RentCafe, with Washington, D.C., among the top cities for such conversions.
Fernando Bonilla-Verdesoto, principal and founder at Soto Architecture & Urban Design in D.C., has been closely following this rising trend, and he believes this is a trend that will continue to gain momentum.
He’s already designed a number of conversions, such as CBG Building Company’s The Oxford, a 187-unit apartment building in Oxon Hill, Md., which was adapted from a former 10-story office building; and Osprey Property Company’s 22 Light Street, an adaptive reuse of an existing six-story office building in Baltimore, which was converted into 40 units.
Currently, Soto Architecture is working with several developers in the D.C. region on possible office-to-multifamily conversions in the near future.
With D.C. recording more than 20 million square feet of vacant office space in 2022, there’s going to be a lot more of it. Bonilla-Verdesoto discussed the growing niche with Commercial Observer. His responses have been edited for length and clarity.
Commercial Observer: How would you characterize the trend of office-to-multifamily in the D.C. region?
Bonilla-Verdesoto: Creative adaptive reuse is a good characterization of what’s happening. This is not a new concept, but as office vacancy rates continue to climb in urban areas across the country, D.C., like many other cities, is looking for creative ways to activate downtowns. One way to make use of aging office buildings is to transition them into apartments.
What makes D.C. a leading city for these sorts of conversions?
The D.C. area office market lags its peer markets in recovery from the pandemic, as many employers have embraced remote and hybrid work. Although the latest market reports indicate positive Class A office absorption, there are still thousands of vacant square feet of Class B office space in the D.C. area, especially in older Central Business Districts in close proximity to mass transit stations.
Is it more challenging to do this in D.C. than in other places? What’s required?
The D.C. region presents several challenges for office-to-residential conversions. For example, each jurisdiction (Washington, D.C., Northern Virginia, or suburban Maryland) has its own zoning regulations and building code interpretations. Energy and sustainability requirements are also much more stringent than other cities. A typical office-to-residential conversion in D.C. will trigger stormwater management regulations, which usually includes vegetated roofs and other strategies that were not included in the original office building. D.C. also requires natural ventilation to the bedrooms to be provided via operable windows, while Maryland and Virginia accept natural air delivered via mechanical ventilation.
What should developers be considering when thinking about doing this?
There are so many factors that owners and developers should consider, but I can narrow it down to five key things.
What makes a property worthy of conversion?
We’ve found that the best candidates for conversion are existing office buildings where the allowable floor-area ratio has already been maximized and where other zoning restrictions are allowed to remain grandfathered (i.e. lot occupancy greater than allowed by current zoning code). Other characteristics include generous floor-to-ceiling height (minimum 10 feet to allow for mechanical ducts, sprinkler lines, etc.), structural systems that are easy to core-drill (i.e. steel construction, as opposed to post-tensioned concrete slabs), and footprints that allow for square footage maximization without the need for complex structural modifications.
What are the big challenges?
The biggest challenge is making the existing floor plate as efficient as possible in a way that natural light is provided to as many bedrooms as possible. This can be alleviated by specifying clerestories and glass doors. Other challenges include the treatment of the facades. Many Class B office buildings were built with large precast panels and ribbon windows, which don’t have a residential feel, and removing the precast panels and ribbon windows can be very expensive. There are creative ways where the panels and windows can remain in place and give the building a contemporary look.
Do you expect this trend to continue?
Yes. CBRE and other office market analysts have predicted additional conversions in the D.C. region and other large urban areas. The multifamily rental market remains strong, especially in central urban areas, while demand for office space continues to drop.
Keith Loria can be reached at Kloria@commercialobserver.com.
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