Office to Multi-family Conversions, How To Combat High Vacancy Rates

[Jackson Foutch]

With the current state of the CRE market and large office vacancy rates, my team and I have found a solution to combat the upcoming pain in the office building market.

Our company, Foutch Brothers, based out of Kansas City, MO have found comprehensive solutions to combat the large vacancy rates that office buildings currently have by converting the buildings into multi-family housing to meet the current demands of affordable housing space. With interest rates pushing higher and higher, office building owners have been put in a tight position to consider refinancing at a much higher rate, or suffering a loss on a sale of the building. However, if you are in this position, we would like to help you! Read the following article below recently published by the KC Business Journal about or newest office to multi-family conversion and how we can save a potential major loss on the sale of an office building. 

https://www.bizjournals.com/ka...

It all started when a group of investors lost their tails on office space next to the KCI airport and the group of office buildings went into foreclosure. Our team scooped them up at a major discount because we saw how we could put up some walls, install some kitchens and bathrooms, and we had ourselves a newly-renovated, 108 unit apartment complex. Some key points that we took into consideration as to why we decided on the project are as follows: 

1. Changing Work Patterns: The surge in remote working, accelerated by the COVID-19 pandemic and the growth of technology that enables it, has led to an increase in vacant office spaces. This trend has left many cities with an abundance of empty commercial real estate.
2. Housing Shortages: Many urban areas are facing a shortage of affordable housing. Converting underutilized office spaces into apartments or condos can help alleviate this issue.
3. Sustainability: Conversions are often seen as a sustainable option since they repurpose existing structures rather than building new ones, which can help reduce the carbon footprint associated with new construction.
4. Urban Revitalization: In some cases, conversions can play a key role in revitalizing city centers, attracting new residents and bringing more activity to these areas.
5. Financial Incentives: In some cases, the financial return from converting an office building to a multifamily property can be greater than maintaining it as an office property, particularly in areas where the demand for office space is low.

The conversion process involves significant architectural and construction work. The interiors of the office buildings were gutted and reconfigured to create individual living spaces. This conversion required adding and/or upgrading to residential-grade electrical, plumbing, heating, and ventilation systems. 

Feel free to reach out to me with any questions if you currently find yourself in this position now or are looking to invest into future projects of this structure!