Office Space 2.0 -- for those properties that are having a hard time with vacancies, what can they do to stay relevant or is there a new iteration of space that comes from office space?
I've been hearing of the revamping office space to include more amenities like outdoor space and the like, but if the companies aren't coming back to the office and the building is plagued with vacancies, can the building (instead of adding amenities) evolve into something different?  

And if so, what do you think the revamped office space would turn into?
[{"id": "hwa26hl", "text": "In Orange County California those buildings have been demolished and turned into industrial. 2 millions square feet of class c office removed from the base completely.", "replies": [{"id": "hwab8tj", "text": "Is this since the beginning of the pandemic or did this start before March 2020?", "replies": [{"id": "hwaf4mb", "text": "Amazon bought the Bank of America call center in brea in November and duke realty blowing up the Raytheon building also in November, Goodman doing Toyo tires hq in September, so most of these deals were last 6 months. \n\nWestern realco and the Panasonic site, rexford and the deutche bank deal. Like 9 deals off the top of my head. Probs more now.", "replies": [], "depth": 3}, {"id": "hwbskew", "text": "This was a trend in oc before the pandemic.", "replies": [], "depth": 3}], "depth": 2}, {"id": "hwamzdw", "text": "It's happening in north and central NJ too.", "replies": [], "depth": 2}], "depth": 1}, {"id": "hwa4gc2", "text": "Cinvert to temp-controlled self-storage space?", "replies": [], "depth": 1}, {"id": "hwa9ddx", "text": "I've worked on some office to multifamily conversions that worked successfully. There a great article I'll try to link below about a successful conversion. Stay tuned\n\nEDIT: Found the [article](https://www.wsj.com/articles/underused-office-buildings-get-new-life-as-deluxe-apartments-11641301203?st=jvl8m9qckk4xiu1&amp;reflink=desktopwebshare_permalink)", "replies": [{"id": "hwcr30w", "text": "Pretty much all boils down to coversion cost and rent cost differentials. IE $40 psf class a vs $3000 per month on 1k sq ft, obviously losing 10% in rent psf, loss to common area and finally capital investment. Can be hard to get the math to work unless you have really long term vacancies.  If it is a smaller urban office, especially class B converting to A multifamily the math may work much better.  We had a crappy office making $30 psf in prime SF, and multifamily rents were in the $55 psf range (not accounting for losing about 10% to common areas).\n\nOn the flip side if vacancy is high in a class a multifamily market you may make it up on cap rate spread.", "replies": [], "depth": 2}], "depth": 1}, {"id": "hwaafcq", "text": "Incubator tech/lab/biotech but most favorably and cheapest to spec (zoning permitting) Industrial.", "replies": [], "depth": 1}, {"id": "hwabh1n", "text": "Does anyone think vertical farms take off enough to fill a few office towers in every major city? It\u2019s interesting from a supply chain perspective.", "replies": [{"id": "hwaj57m", "text": "I don\u2019t think costs will ever get there. Food. Trucking? Organic premium?", "replies": [], "depth": 2}, {"id": "hwajj0f", "text": "IMO its just not efficient from a labor and movements standpoint. Maybe you get some users that only want racks 9-10' high with easy up-down movement off rolling stairs or similar. I think most are looking at automation and therefore would rather be 20'+ clear, with freedom of movement for expensive equipment to cover large footprints.", "replies": [], "depth": 2}, {"id": "hwb3279", "text": "Ahhhh I so hope this happens!", "replies": [], "depth": 2}, {"id": "hwb46wc", "text": "Never", "replies": [], "depth": 2}], "depth": 1}, {"id": "hwacifh", "text": "Any space that is currently unproductive, will eventually be turned in to productive use.", "replies": [{"id": "hwb2b4g", "text": "Sure-- do you have any ideas what that new productive use will be?", "replies": [{"id": "hwcgob5", "text": "I don't.  That's for the market to decide.\n\nIf I was the arbiter of all things remnant real estate, I'm confident I'd have a much larger staff these days.", "replies": [], "depth": 3}], "depth": 2}, {"id": "hwf4p1q", "text": "True but someone may end up taking it on the chin before that happens.", "replies": [{"id": "hwfdbmt", "text": "Indeed.  (That is how math tends to work).", "replies": [{"id": "hwfngok", "text": "Math, yes. Good investment, no.", "replies": [{"id": "hwgkreb", "text": "Who said it has to be you that takes it on the chin.\n\nDistressed properties always open with opportunity (that's why they call them \"distressed\").\n\nEvery property today that isn't producing at it's best has already \"*taken it on the chin*\", ergo, opportunity abounds for those with their eyes open.\n\nAnd that opportunity is happening in cascades.  Everywhere.\n\nThe 4 that down voted my original premise, clearly don't understand how to make lemonade.  (Doesn't bother me at all.  They're probably drinking mine).\n\nI purchased a medical building 12 years ago for 40% of its value because no one could see how to get an old C quality, 40 year old medical building, not maintained at any reasonable level since it was first built, back in the income producing saddle.\n\nEvery broker that came by initially said I'd be lucky to get $12.00 a sf for it.\n\nMy first lease was for $34.00 a sf within 6 months (that *I* wrote, and found because no one would even bring tenants by at the prices I was asking), my next one was for $39.00 a sf, every tenant that was paying less than $10.00, and there were several that came with the purchase (all on month to month, no NNN's), renegotiated with me within 2 years at a 60 - 80% premium, 5 year leases, and were thrilled to do so.\n\nAnd only one is a medical tenant.  The remainder are small business office. Averaging $35.00 a sf.\n\nThose kinds of deals are everywhere, if a person opens their eyes.\n\nSome choose to believe they don't exist. Some don't want to expend the effort.\n\n(Works for me).\n\nAny space that is currently unproductive, will eventually be turned in to productive use. (By someone).", "replies": [], "depth": 5}], "depth": 4}], "depth": 3}], "depth": 2}], "depth": 1}, {"id": "hwag6vu", "text": "What you will see, when the smart developers come in is turning these massive office buildings into arcologies like in Sim City. Work-Live-Play all in one.", "replies": [], "depth": 1}, {"id": "hwaizzo", "text": "Depending on the space, and the location, our local municipality (tertiary market) is offering grants up to $40k/unit to convert to affordable housing.", "replies": [{"id": "hwam1ig", "text": "Which market is this?", "replies": [{"id": "hwamnnk", "text": "In SW Michigan.", "replies": [{"id": "hwan5t1", "text": "Well\u2026 luckily I\u2019m u/michkid420 - mich as in Michigan - hit me with some town names fam!", "replies": [{"id": "hwdyg7c", "text": "I'm going to step back just a bit on this because all I know of it is second hand. In Battle Creek, I was looking at an available two story commercial space, basically a 1+1 where there was the possibility to convert the 2nd floor to apartments. It was referenced that there was grant money, but it was not something I was interested in, I don't do residential, and I did not investigate the program(s) at all.\r  \n\r  \nThe numbers didn't make sense, as even if there was grant money available, the costs for potential lead paint/asbestos abatement, fire code, ADA, etc... to bring up to current code, were way too much to convert the space and still be financially viable.\r  \n\r  \nMy assumption would be that the city is using Federal block fund grants from the Federal Community Development program, or the HOME Investment Partnership.", "replies": [], "depth": 5}], "depth": 4}], "depth": 3}], "depth": 2}], "depth": 1}, {"id": "hwamzbn", "text": "We\u2019re doing pretty well with office space on Long Island in regards to office space. \n\nTrends have changed a lot. A lot more smaller offices. We\u2019re diving spaces a lot more than we used to.", "replies": [], "depth": 1}, {"id": "hwanfqn", "text": "Not sure how it is elsewhere, but in the Southern California market I think class A &amp; B office will make a come back. Nobody is lending to LLC's for office development and even the big developers have put office plans on ice so there is simply nothing in the pipeline. The last office (700ksf) was completed in early 2021 in orange county, but I believe that building had been in the works prior to Covid. No new developments have been completed in q4 2021 and I believe that's also the case for q1 2022. In the secondary and tertiary markets, industrial is fast approaching office prices for rent. I just had a prospective tenant last week that is an industrial tenant, but his lease is up and his landlord is kicking them out of the office portion of their industrial lease to tear out the office and make more space for industrial tenants. I think this will get more common as it catches on amongst industrial landlords. Most of the flex office spaces I had seen listed are now being listed as industrial. A lot of class C office is disappearing and eventually they are going to need somewhere to go.", "replies": [], "depth": 1}, {"id": "hwasasu", "text": "In my market (Chicago) trophy office space is still doing very well but even the B/A- office is struggling with vacancy. Not enough to warrant adaptive reuse, but for corporate campuses and older offices there\u2019s definitely demolition and conversion to warehouses.", "replies": [{"id": "hwf4kf7", "text": "I\u2019m not in CRE myself but friends of mine are seeing the same. The office has to be sharp/fancy/centrally located enough to make people want to be in it. Average office buildings just don\u2019t have the appeal right now.", "replies": [], "depth": 2}], "depth": 1}, {"id": "hwbcql8", "text": "I'm curious how expensive it is to convert. We had an office complex built in 80s go dark over the past 5ish years, so a developer is leveling the whole thing and building luxury medium density housing.\n\nWe have a mixed-use complex in my town that has 3 office towers, I think converting one or two to residential would be a super ideal living situation. Just don't know if the value for a condo is there or not.", "replies": [], "depth": 1}, {"id": "hwbnibp", "text": "rent by the day/week/month offices or multifamily. Someone did a office to multifamily conversion on a office tower in Asheville, NC", "replies": [], "depth": 1}, {"id": "hwbsih7", "text": "I own a lot of office and it\u2019s honestly been tough but it\u2019s cash flowing and we have seen a lot of demand pick back up recently. This pandemic is going to position us for strength in the future we are adapting some new trend and changes but office will be and already is coming back.", "replies": [], "depth": 1}]