Plumbing

120 flats deliberate in Heart Metropolis office-to-residential conversion

An eight-story office building formerly owned by the Jewish Federation of Greater Philadelphia will be converted into a 120-unit residential complex.

The property at 2100-12 Arch Street, formerly Building of the Jewish Community Services, was sold for $12 million last month to MM Partners, a developer specializing in adaptive reuse projects. A building permit Approval was granted this week for the planned residential conversion, which will also include commercial space on the ground floor. A schedule for the project is not yet known.

Since the COVID-19 pandemic drastically changed commercial real estate markets, proponents of office-to-residential conversions have argued that aging, vacant office buildings should be repurposed for residential use.

Property records indicate the building was constructed in 1913. The Jewish Union sold the 121,500 square meter property because it was not there optimized spatial; The organization had rented space to non-profit organizations, but didn’t want to be a long-term landlord. The company has since moved its offices to 23,000 square feet on a single floor of a building at 20th and Market Streets.

MM Partners has completed more than a dozen adaptive reuse projects in Philadelphia over the years, including the conversion of Fairmount’s AF Bornot Dye Works building into a mixed-use facility; the Waterworks Apartments, built in a former industrial warehouse in Manayunk; and the former FA Poth Brewing Co. building in Brewerytown, now housing apartments and commercial space.

Although such projects are touted as office vacancy solutions, especially in light of the ongoing work-from-home world, adaptive repurposing is required projects are difficult to complete technically and financially. Office buildings are built to restrict the entry of natural light, and their centralized utilities make it difficult to connect heating, ventilation and plumbing to homes.

Office space is also scattered around. Difficult buildings do not necessarily lack tenants and the combination of offices and new housing on multiple floors is not ideal for adapting an older building versus building a new co-living area (where people rent and work). .

Although apartment rents have risen in line with inflation in recent years, office rents remain more expensive per square foot, so developers and building owners may hold back on new leases rather than investing in residential conversions. And even if they move to residential areas, the adapted properties would not be an automatic solution for the people most affected by housing shortages. With no subsidies or other incentives for affordable housing, the economy suggests that the housing is being offered at or above market prices. That’s a tough sell for downtown renters in places like Philly, where nearly half of the city’s newbuild homes are in Center City.

Source/Google EarthAn aerial view of 2100-12 Arch St. in Center City.

Some states and localities have been looking for ways to encourage office-to-residential conversion projects. In March, Chicago city leaders took up the idea, investing $550 million to convert three office buildings — with about 5 million square feet of vacant office space — into more than 1,000 mixed-income housing units. And in San Francisco, where the office vacancy rate hit 29.5% in the first quarter of this year, city officials moved to cut costs and remove roadblocks to projects.

So far, however, results have been limited. A report released last December by Coldwell banker Richard Ellis, the world’s largest commercial real estate firm, found that despite the hype surrounding office-to-residential conversions, there were only 42 completed conversions in the US last year. Between 2017 and 2021, an average of 39 conversions were completed each year, the report said.

In Philadelphia, CBRE reported that the downtown office vacancy rate was about 19.2% in the first quarter of 2023 and nearly 44 million square feet were vacant. The office vacancy rate across the suburb was 23.5%, with more than 62 million square meters available. Those numbers followed a period of apparent recovery in mid-last year, offset by staff cuts and tenant subletting of excess space.

During the COVID era, office occupancy in Philly fell by more than 9.7 million square feet, which is about the size of eight Comcast centers, according to the Inquirer.

Related Articles

Leave a Reply

Your email address will not be published. Required fields are marked *

Back to top button