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I recently read a fascinating article on a recently completed multi-family development in Alexandria, Virginia called Park+Ford. It describes the conversion of a 1980s era office park into 435 units of housing. What makes this achievement so exciting is that it seems to refute the conventional wisdom that office-to-apartment conversions rarely pencil out. According to the Wall Street Journal, 151 office buildings, hotels, and other commercial buildings were converted to apartments in the United States in 2021. In a market where businesses are reducing their office footprints as a result of the new hybrid work paradigm, and where more housing is desperately needed, could such adaptive reuse become more common? A closer look at the issues confronting most office conversions shows that Park+Ford is, and perhaps only a few office buildings could ever be efficiently converted to apartment use.
As noted in The Business Journals, a recent Moody’s Analytics report looked at New York City and found that only 3% of the city’s 1100 office buildings would be viable for apartment conversions. The reasons: (1) office building values would have to decrease 30-40% for the construction costs for redevelopment to be feasible; (2) office buildings usually have deep floor plates 100 to 120 feet wide (as opposed to 40-50 feet for most apartment buildings), meaning that interiors would be too far away from windows to be appealing for residential use; and (3) much depends on the location of the office building, whether it is close to amenities or employment. The Business Journals article doesn’t even mention the challenges associated with zoning and other regulations.
This is what makes the Park+Ford project in Alexandria so interesting. The developer acquired the office park at a significant value compared to the cost of developing a new project. The acquisition came just as a major tenant was exiting, and the developer was able to negotiate lease terminations with the remaining tenants on favorable terms.
The office towers themselves only had 90-foot floor plates, and they designed the units to have interior den spaces draw in natural light through openings to the main living area, laid out near the windows. Higher than usual ceilings and floor-to-ceiling windows allow for even more natural light to penetrate the interiors. They were also able to reuse a redundant second elevator bank as trash and recycling chutes, and for mechanical, electrical, and plumbing.
The project was already located in a residential area, five miles south of Washington, D.C., and only 3.5 miles from the Pentagon, making the location desirable for housing. Additionally, the office park already came with abundant parking.
Importantly, the developer had the City of Alexandria on its side. The city had already been working on a policy to facilitate the conversion of obsolete office buildings to residential uses. The developer also had the cooperation of the neighboring community, particularly since the traffic counts associated with a residential project are so much lower than that of an office park, and the community already had several high-rise apartment buildings.
All of this helped Park+Ford overcome the hurdles described in the Moody Analytics report. But even if this project was unique, other developers and housing advocates are trying to figure out ways to make more projects like it work. At the recent YIMBYtown conference at Portland State University, an “unconference” panel was convened to brainstorm ways to reduce the obstacles to office-to-residential conversions. It will be interesting to see if more developers are able to figure out a way to make office to residential conversion projects pencil out, and we start to see more projects like Park+Ford.
