ALL THE MONEY NEWS YOU NEED TO KNOW | | | | | | Swapna Venugopal Ramaswamy | National Housing and Economy Correspondent @SwapnaVenugopal | | |
Happy Tuesday, The Daily Money readers! This is Swapna Venugopal Ramaswamy bringing you today's top headlines. |
The pandemic has transformed the way Americans live and work, which has had a domino effect on many sectors of the economy, but none as pronounced as the commercial real estate market in big cities. As remote and hybrid work has taken root, many companies have chosen to consolidate their footprint and move into smaller offices or even eschew office space altogether, leaving many office buildings in big cities languishing without tenants. | A rendering of the top three floors of 160 Water Street, which will have a shared landscaped amenity floor and two penthouse floors, with a total of 16 units. Gensler for Vanbarton Inc |
Around 15% of office buildings in the commercial districts of the 105 largest cities in the U.S. are physically suitable for conversion, according to a working paper published by the National Bureau of Economic Research. Discounting properties that still have a large share of long-term tenants in place reduces the inventory to 13%, and removing relatively clean buildings brings it closer to 11% of properties. |
The typical conversion is financially feasible in New York, San Francisco, San Jose, Boston, Washington D.C., and Denver, according to the working paper. These are markets where apartment rents are high enough to overcome the purchase cost of the office building and the cost of conversion, the authors say. |
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