Downtown office buildings around the country are selling for much lower prices than before the pandemic, prompting questions about the future of central business districts.
The sharp rise in office vacancies — and attendant drops in value for office buildings — could be worse than it appears, according to Professor Stijn Van Nieuwerburgh, who spoke with Governing’s Alan Greenblatt about the issue.
According to Van Nieuwerburgh, this is because “vacancy rates aren’t showing the whole picture, since there are still lots of leased offices that aren’t occupied or are under-occupied” as tenants wait out long-term leases, Greenblatt explains. Meanwhile, lower building values and higher mortgage rates mean that for many owners, it’s more profitable to walk away.
Van Nieuwerburgh warns that this slow-moving crisis will lead to a reduction in property taxes for cities. “In my view, we have permanently lower demand for office stock that is built on valuable land, so something else is the highest and best use for that land. The only option is to repurpose those buildings or that land.” However, Van Nieuwerburgh estimates that only 15 percent of office buildings are appropriate for residential conversion.
FULL STORY: Empty Downtowns Are Still Depleting Local Coffers
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Office Conversion Sees No Sign of Slowing
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Denver Voters Approve Downtown Revitalization Bonds
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Study: Maui’s Plan to Convert Vacation Rentals to Long-Term Housing Could Cause Nearly $1 Billion Economic Loss
The plan would reduce visitor accommodation by 25,% resulting in 1,900 jobs lost.
North Texas Transit Leaders Tout Benefits of TOD for Growing Region
At a summit focused on transit-oriented development, policymakers discussed how North Texas’ expanded light rail system can serve as a tool for economic growth.
Using Old Oil and Gas Wells for Green Energy Storage
Penn State researchers have found that repurposing abandoned oil and gas wells for geothermal-assisted compressed-air energy storage can boost efficiency, reduce environmental risks, and support clean energy and job transitions.
Santa Barbara Could Build Housing on County Land
County supervisors moved forward a proposal to build workforce housing on two county-owned parcels.
San Mateo Formally Opposes Freeway Project
The city council will send a letter to Caltrans urging the agency to reconsider a plan to expand the 101 through the city of San Mateo.
A Bronx Community Fights to Have its Voice Heard
After organizing and giving input for decades, the community around the Kingsbridge Armory might actually see it redeveloped — and they want to continue to have a say in how it goes.
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