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Left vacant by Covid-19, can offices become homes to fix housing shortages?

Converting empty offices into much-needed housing seems a good idea, but may not always be feasible.

The coronavirus pandemic has increased pressure on governments to address shortages in housing and allowed authorities more freedom to convert empty offices, urban experts said on Tuesday.

Last month, the South Korean government said it will add 114,000 homes for public housing within the next two years by buying empty hotels and offices and converting them into residences.

Singapore is pushing a plan to redevelop old offices in its central business district (CBD) with new incentives for converting excess car park spaces into residences, shops, restaurants and indoor farms.

“Governments and developers across the region are looking at converting commercial space into housing,” said Justin Eng, an associate director of research at real estate consultancy Knight Frank Asia-Pacific, adding that it is still only “sporadic”.

“These trends had been in motion prior to Covid-19, but have now been accelerated,” he said, with incentives from the government an added benefit.

As governments around the world have imposed movement restrictions during the pandemic, developers and authorities are contending with fewer workers in offices.

With more people working from home during this period, it sharpens the need for the CBD to have more mixed uses with more live-in population.

Singapore’s Urban Redevelopment Authority

Eight out of 10 workers in Singapore preferred to work from home or have flexible arrangements, a survey in October showed - which could leave plenty of vacant offices and car parks in the land-starved city.

But the scheme to encourage the conversion of offices would be more feasible for turning hotels and service apartments into residences, Eng told the Thomson Reuters Foundation.

“Changing an office to residential would take longer and cost more. The added costs might not make the change of use financially feasible,” he said.

A spokeswoman for Singapore’s Urban Redevelopment Authority said they had received “a number of proposals” for the schemes.

“With more people working from home during this period, it sharpens the need for the CBD to have more mixed uses with more live-in population,” she said.

Converting older or unused commercial spaces into housing is not a new trend. A scheme in New York City that launched in the mid-1990s provides tax breaks for such conversions.

In the last decade, offices were the most common structures to be turned into rental units across the United States, according to research by property rental website RENTCafe.

But this approach may not work well in India - where the government in July announced a plan to create more affordable rental housing - as quality office space is in short supply across the top cities, and property prices are still high, said Anuj Puri, chairman of Anarock Property Consultants.

Instead, it may be “far more feasible” to turn any unused offices into warehouse spaces for e-commerce companies that have seen a boom in demand during the pandemic, he said.

Conversions of offices into modern manufacturing facilities such as 3-D printing, vertical schools or urban farms are a far more feasible option, agreed Tony Matthews, a lecturer in urban and environmental planning at Australia’s Griffith University.

Apart from being difficult and expensive, converting offices into housing can also have “negative social consequences”, he said.

For example, Britain’s scheme to redevelop old offices and shops with easier approvals created some 65,000 flats, but was “catastrophic” because of a lack of public transport and services, and social isolation, he said.

“It seems on the surface like a good idea and an efficient use of space and resources. In reality, the experience is often quite different,” said Matthews.

This story was published with permission from Thomson Reuters Foundation, the charitable arm of Thomson Reuters, that covers humanitarian news, climate change, resilience, women’s rights, trafficking and property rights. Visit http://news.trust.org/climate.

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