Retrofitted offices could be a big trend, but there’s also some big hurdles.
When Covid hit and our CBDs became ghost-towns, there was a lot of talk about repurposing all those office buildings as apartments.
Heck, that chatter started long before Covid. It’s bit an idea you see spit-balled around from time to time.
But, maybe it is finally an idea whose time has come. Because if it’s an idea that can make it in New York, it’s an idea that can make it anywhere:
The largest office-to-condo conversion in New York City history will get its first residents this month, as developers and policymakers turn their attention to repurposing more commercial buildings.
The first move-ins are scheduled for late March at One Wall Street, the Macklowe Properties project that transformed a landmark Art Deco office tower into an amenity-filled, 566-unit residential property.
After five years of renovations, the former Irving Trust headquarters at Broadway and Wall Street, built in 1931, is now full of marble kitchens and baths, herringbone floors and – in a sign of how workplaces have changed – home offices.
From its birth as a tower of finance in 1930 to its new life as a residential tower, the story of One Wall Street has been over 90 years in the making.
“It was a landmark, it was the threshold of the Financial District, it was really walking right into the home of capitalism,” developer Harry Macklowe said.
Is the ‘home of capitalism’ really the place you want as your home for a family and two kids? Lol. Maybe. I’m sure it’s somebody’s cup of tea.
But this is a phenomenon, driven by macro trends: a housing shortage, low office occupancy rates, wealthy a healthy dose of government support thrown in:
The project is opening in a city that’s changed dramatically since 2014, when Macklowe paid $US585 million for the tower that was still partly occupied by employees of Irving successor BNY Mellon. New York’s housing shortage has worsened, while office-occupancy rates are still well below pre-pandemic levels.
Though the renovations started in an earlier era, One Wall Street is the first major conversion to open amid a push by Mayor Eric Adams for changes to city and state policies that would clear the way for more such projects.
Those same macro factors are at play here in Australia, so I don’t see why we won’t start to see similar trends emerge here.
However, there are still some big hurdles to get over.
First, there’s perceptions. Not everyone wants to live in ‘the home of capitalism’, or a retrofitted cubicle farm:
About 50 per cent of the available units have sold. Macklowe said the process started slowly, as the project was bogged down by perceptions of previous Financial District conversions and buyers’ concerns about living in the primarily commercial neighbourhood.
The second big concern is that a proper retro-fit is a massive job, if you want to do it properly:
Earlier residential conversions in the area had long, dark rooms shaped around existing elevator shafts and pipes, and still feel like the offices they once were.
“We had to take all the infrastructure out of the building, all the plumbing, all the electric, all the elevators, all the stairs, all the shafts and open it up to a shell so that the only thing remaining in the building was the exterior, which had been landmarked,” Macklowe said.
Seriously? You have to gut the building and start over?
That sounds expensive.
But where there’s a will there’s a way. Perceptions can shift, and there’s always a price point that makes any expense worth it.
So look out for this trend here in Australia. My bet is we’ll see a few of these projects ourselves in coming years.
DB.