Repurposing Commercial Office Space to Residential Key to Vibrant Downtown Cores

Over the last year, plenty of discussions have concerned the repurposing of commercial office space into residential units. Although costly and technically challenging, this strategy makes sense for many as it kills two birds with one stone: addressing housing affordability and shortages and preventing a meltdown in the commercial real estate market.

The office sector is struggling to stay afloat as employers embrace the work-from-home phenomenon to appease disgruntled employees who cannot bear the thought of travelling two hours a day to perform the job they can do at home in their pyjamas as the kitchen table. But while this might seem like a common-sense approach – companies can save money on rent and employees can enjoy various savings – it could lead to economic consequences, something that many business groups have warned.

Across North America, many downtown cores are seeing less traffic than before the coronavirus pandemic. This creates a broader consequential issue since fewer coffee shops, clothing stores, and public transportation stations would be frequented.

Canadian Chamber of Commerce and the Ottawa Board of Trade recently penned a letter to the federal government requesting that civil servants return to the office.

“The federal government is not only a major employer in cities and communities across Canada, but in many places, it is the anchor employer,” the letter stated. “As businesses in these communities assess their long-term viability given the pandemic’s damaging effects on downtown centres, restoring normal economic activity requires the federal government to act now.”

But if these calls do not work, what is the solution? Some say repurposing would be a successful venture.

Repurposing of Commercial Office Space

The main discussion is that commercial office space could be converted into residential opportunities. Critics note that this is a difficult pursuit, especially regarding bathroom amenities since piping is vastly different in an office tower than in a condominium.

“On the office front, with the work-from-home model taking root, many corporations within the downtown core of major Canadian centres are envisioning smaller footprints in their future,” said Christopher Alexander, the president of RE/MAX Canada, in a report. “As sublet space expands and lease renewals involve reduced space requirements, management is reconsidering their options.”

So, what can be done then? Some suggest that incentives might be a feasible alternative. In fact, others seem to agree: about half of the market surveyed in a RE/MAX report showcased conversion activity in the commercial real estate market.

Consider the home to SNC-Lavalin Group, a 10-storey building in downtown Calgary. After being vacant for a few years, the building, owned by Peoplefirst Developments, is being transformed. The building is being stripped to its concrete, and removing old electrical, mechanical, and plumbing systems. It will be retrofitted and installed with thermal barriers, windows, and balconies. The goal is to build more than 100 residential units and retail space.

The federal government is ostensibly on board with these types of initiatives.

In 2022, Ottawa announced that about one-quarter of a $1.3 billion fund for housing would be dedicated to converting vacant commercial properties into 800 market rental housing units. Calgary is also pitching in, adding about $73 million to enable the office-to-residential conversion trends.

That said, in the end, these conversions have been limited, mainly due to the fact that many buildings in their core need to be properly suited for repurposing.

Therefore, others argue that changing the office space could also be a workable solution if office-to-residential campaigns do not work. Some of the ideas on the table include expanding sublet space, trimming space requirements in lease renewals, or changing the space to integrate a social component that would, in theory, attract more individuals back to the office.

Is Repurposing the Future of Cities?

Repurposing commercial office space holds the key to creating vibrant cities that adapt to the evolving needs of their communities. As work dynamics change and technological advancements redefine traditional office environments, repurposing these spaces becomes crucial.

Indeed, by transforming vacant or under-utilized office buildings into mixed-use facilities, cities can foster a sense of vibrancy and connectivity. These repurposed spaces can be revitalized as residential units, creative hubs, startup incubators, or cultural centres. These types of transformations can resuscitate idle structures and facilitate growth, attract talent, and bolster the general livability in urban centres by cultivating ecosystems, fostering collaboration, and enhancing community engagement.

Ultimately, as cities continue to evolve, embracing the adaptive reuse of commercial office space becomes essential in creating thriving and dynamic urban landscapes that cater to the developing needs of workers, employers, businesses, and economies.

Sources:
Chamber
Financial Post