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We’re turning offices into homes now

Beam me up, Scotty!
͏‌ ͏‌ ͏‌ ͏‌ ͏‌ ͏‌ ͏‌ ͏‌ ͏‌ ͏‌ ͏‌ ͏‌ ͏‌ ͏‌ ͏‌ ͏‌ ͏‌ ͏‌ ͏‌ ͏‌ ͏‌ ͏‌ ͏‌ ͏‌ ͏‌ ͏‌ ͏‌ ͏‌ ͏‌ ͏‌ ͏‌ ͏‌ ͏‌ ͏‌ ͏‌ ͏‌ ͏‌ ͏‌ ͏‌ ͏‌ ͏‌ ͏‌ ͏‌ ͏‌ ͏‌ ͏‌ ͏‌ ͏‌ ͏‌ ͏‌ ͏‌ ͏‌ ͏‌ ͏‌ ͏‌ ͏‌ ͏‌ ͏‌ ͏‌ ͏‌ ͏‌ ͏‌ ͏‌ ͏‌ ͏‌ ͏‌ ͏‌ ͏‌ ͏‌ ͏‌ ͏‌ ͏‌ ͏‌ ͏‌ ͏‌ ͏‌ ͏‌ ͏‌ ͏‌ ͏‌ ͏‌ ͏‌ ͏‌ ͏‌ ͏‌ ͏‌ ͏‌ ͏‌ ͏‌ ͏‌ ͏‌ ͏‌ ͏‌ ͏‌ ͏‌ ͏‌ ͏‌ ͏‌ ͏‌ ͏‌ ͏‌ ͏‌ ͏‌ ͏‌ ͏‌ ͏‌ ͏‌ ͏‌ ͏‌ ͏‌ ͏‌ ͏‌ ͏‌ ͏‌ 
September 16, 2023 • Issue #109
Money Moves

Happy Saturday!

This week, we’re discussing why converting vacant office buildings into apartments is a good, but tricky, idea, a wave of recent Airbnb restrictions and a futuristic home in the heart of Texas.

I’m moving into . . . my former office?
Office
Getty Images

There’s been a lot of chatter lately about turning empty offices into living spaces — and I’m not talking about bringing your sleeping bag to work a la X (formerly known as Twitter.)

The buzz is about converting vacant — or nearly vacant — commercial buildings, like office highrises, into residential apartments. The idea is to kill two birds with one stone: Remote work has left a lot of property owners with a lot of empty office space (and a lot of bills to pay) and the housing market is suffering from an acute lack of available homes. Why not marry the two and see what comes out of it?

Last month, the mayor of New York City, Eric Adams, outlined a proposal that would make office-to-housing conversions easier by facilitating expedited construction approvals and zoning changes. The program would create more residential space, including single-family homes, supportive housing and dorms.

The Big Apple isn’t the only city eyeing this type of retrofit: San Francisco, Chicago and a few other major cities already have similar proposals for expediting the conversion of their own commercial buildings into residential units.

There are lots of potential benefits to these programs, Jeffrey Havsy, commercial real estate industry practice lead at Moody’s Analytics, tells me. First and foremost, it would add much-needed housing inventory to local markets. It could also help revitalize neighborhoods that, in the absence of office workers, are in danger of falling into disrepair. With more people living in an area, more retail businesses like supermarkets, restaurants and shops will likely follow.

“All of a sudden, [an] area that might have been on its way to being blighted because no one is going into that office anymore. . . starts to thrive,” he says.

Repurposing old office buildings makes sense from an environmental perspective, too, Havsy adds. Manufacturing new concrete is expensive, and creates a significant amount of gasses like carbon dioxide, which contributes to climate change.

Of course, there are some obstacles.

The first is cost. Any developer who undertakes a project like this will want to make sure it’s a profitable endeavor, so most of the homes built under these initiatives will likely be luxury apartments, not affordable housing. Another barrier is the fact that not every former office building has a suitable footprint for this kind of retrofit — think of the challenge, for instance, of turning an office floor with one giant communal bathroom into individual units, each outfitted with their own plumbing systems.

“The math makes it challenging,” Havsy tells me.

The upshot? The benefits of creating new homes from old buildings, especially ones in big, expensive cities like Manhattan with nothing but a bunch of empty cubicles inhabiting them, make this a worthwhile effort. But we shouldn’t expect it to solve the housing affordability crisis overnight.

The Airbnb bubble revisited
Bans
Olive Burd / Money; Getty Images; Nextrecord Archives / Getty Images; Smith Collection / Getty Images; Found Image Holdings / Getty Images

A few weeks ago, I wrote about a rumor swirling on social media that Airbnb might be heading for a bust. Long story short, the company is probably going to be fine. For Airbnb hosts, though, it's a little more complicated.

For years, housing advocates have pushed back against the wave of peer-to-peer vacation rentals popping up across the country, citing the negative impact it can have on local housing markets (namely, pushing home and rental prices higher). Now, as Money reporter Brenden Rearick puts it, “those advocates have finally started getting their wish.”

In New York, as of this month, short-term rental hosts must be physically present while their unit is being rented out.

At the other end of the spectrum, hosts in cities like Phoenix, Arizona are only required to register their property or have a license to operate a short-term rental, which means they can face a lot of local competition for a limited number of visitor dollars.

In either case, many hosts are struggling to make the same profit as they did pre-COVID. And whether local legislation designed to reign them in will have an actual impact on the market as a whole remains to be seen.

Listing of the week
Exterior
Haley D. Photography
The home of the future is already here

This week’s listing is a desert retreat that’s truly out-of-this-world.

It’s located in Ransom Canyon, Texas (near Lubbock), and is made almost entirely of steel and concrete. The home was custom-designed by sculptor Robert Bruno, who worked on it for 30-some years before passing away in 2008. (Don’t worry, somebody else finished it.)

The structure is a local landmark and it’s easy to see why: the home’s curved walls, stained glass windows and modernist art features make it look like the set of a science fiction movie (in other words, I love it).

The home is currently being used as an Airbnb, so it can be an income-producing property. But where’s the fun in that? Listed by Courtney Bartosh of Monument Realty, you can become the new owner for an otherworldly $2 million.

Interior
Haley D. Photography

’Til next time,
Leslie
P.S. Have you seen a unique listing on social media I should feature in this newsletter? Or have a question about housing or mortgages you desperately want answered? Let me know on Twitter at @LeslieLCook or via email at leslie@money.com.

P.P.S. Have a friend who loves real estate or is looking for a home of their own? Please forward them this email or send them to the Money Moves subscription page.

Money’s Essential Home Buying Resources: Summer 2023

On the hunt? Check out Money’s Mortgage Calculator, list of The Best Mortgage Lenders and look at the latest mortgage rates.

Thinking of refinancing? Our list of The Best Mortgage Refinance Companies can help. You can also use our Mortgage Refinance Calculator or these refi tips.

Key question: How much house can I afford?

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