What's Happening to Vacant Offices? NewsWire

NewsWire: 4/30/22

• Cities are taking office buildings that are now vacant due to remote work and turning them into apartments. But in many big cities, this is proving to be a slow process. (Quartz)
  
• NH: In Houston, 24.1% of downtown office buildings are entirely vacant. In Phoenix, this figure is 20.2%. In Chicago, it’s 16%. In New York City, it’s 12.6%. Overall, two years into the pandemic, downtown offices are seeing their highest vacancy rates in roughly 30 years. And as more businesses go permanently remote, the odds are that they’ll remain empty. (See “Americans Are Choosing to Work Remotely.”)
• In response, some cities have already begun converting offices into other types of buildings. One obvious option is to turn them into housing, given that they’re already located in prime locations. But this isn’t a simple process. Office buildings often do not meet the light and space requirements for residential buildings, and converting them can be even more expensive than new construction.
• Nevertheless, the number of these projects is growing. The number of buildings being converted is still small (under 100), but the number of converted units is growing fast. In 2021, office building conversions resulted in 7,415 new apartment units nationwide, nearly twice as many as the number of units created (3,723) in 2019 and six times the number created a decade ago.
• Other offices are turning into e-commerce warehouses. In many cases, these are older buildings that are marking the end of an era. Allstate’s headquarters outside Chicago, which opened in 1967, was sold late last year to a developer who plans to turn the 232-acre campus into a distribution center. But this, too, isn’t proving to be easy: Now its neighboring suburbs are fighting over who will have the right to the new center’s tax revenue.

Did You Know?

• Have Streaming Services Reached Saturation? After expanding rapidly for the past few years, the high-flying world of streaming services is coming back down to earth. (See "Video Games Are Taking Longer to Complete.") The same week that Netflix (NFLX) stock saw its worst plunge ever, CNN+ announced that it was shutting down less than a month after it launched. (According to The Wall Street Journal, the service had attracted fewer than 100,000 subscribers.) And a new survey brings more bad news: U.S. households have stopped adding to the number of streaming services they subscribe to. The survey, which is conducted quarterly by research firm Kantar, has seen continuous increases in this figure for almost two years. As of Q1 2022, the number of on-demand services accessed per household has leveled off at 4.7 and remains unchanged from Q4 2021. Back in Q1 2020, this figure was 3.0 and continued climbing steadily throughout the pandemic.