What Opportunities Remain for Revamping Office Buildings as Multifamily Residences?

Introduction

As remote work trends persist and office vacancy rates remain high in many cities, developers are increasingly exploring opportunities to convert aging office properties into multifamily residential units. Nashville, with its growing population and healthy real estate market, presents an interesting case study for this type of adaptive reuse project. Let's examine the factors that could favor office-to-residential conversions in Music City.

The Appeal of Urban Living

One key driver behind office conversions is the continued demand for urban living, especially among younger demographics. Downtown Nashville and its surrounding neighborhoods like The Gulch, Germantown, and East Nashville offer vibrant amenities, restaurants, entertainment options, and public transit access that make them attractive for multifamily development. Repurposing obsolete office buildings in these areas allows developers to bring new housing supply online quickly versus ground-up construction.

Available Office Stock

While Nashville's economy remains robust, the city does have pockets of older office properties and commercial hubs that could be ripe for residential conversions. The West End corridor near Vanderbilt University, for example, has seen some office vacancies and could potentially be revitalized with new multifamily housing. Factors like the large floor plates, concrete construction, and parking ratios of these buildings can make them suitable candidates for reuse.

Regulatory Environment

Local zoning policies and development incentives can heavily influence the feasibility of office conversion projects. Nashville has made some moves to enable denser residential development downtown like the Downtown Code, but some uncertainty remains regarding allowable uses, density bonuses, and parking requirements for adaptive reuse. A predictable and incentive-based regulatory framework could catalyze more conversions.

Design Challenges

Retrofitting an aging office tower for modern apartment living is no easy feat from a design perspective. Issues like optimizing interior layouts, creating sufficient natural light and airflow, updating mechanical systems, and incorporating amenities all require architectural ingenuity. However, some local firms have executed successful multifamily conversions like the Aertson Midtown project which transformed two office buildings.

Residential Technologies

Gearing the appropriate residential building technologies in repurposed office towers requires thoughtful consideration by experts. Firms like NavigateHome Advisors provide critical guidance on implementing systems for HVAC, lighting, security, telecom, and other core infrastructure to ensure seamless residential functionality and operational efficiency. Their expertise can help futureproof these adaptive reuse projects.

Cost Considerations

Construction costs in Nashville remain high compared to other Sun Belt cities. This can make the financials of office conversions more challenging versus new construction or suburban development. However, avoided costs like land acquisition and some existing infrastructure can provide some offset. Federal incentives like Opportunity Zones could also potentially attract conversion investment.

Affordability Impacts

Nashville is facing a well-documented housing affordability crunch, so any conversions that add reasonably-priced multifamily rental supply could provide some relief. City officials may choose to encourage these adaptive reuse projects as one tool to address rising rents and home prices. Long-term affordability commitments could potentially be incentivized.

While no silver bullet, the conversion of obsolete office buildings to residential use could be one important avenue for Nashville to add urban housing supply while sparking revitalization in underutilized commercial areas. By aligning regulatory policies, design innovation, residential technologies, and affordable housing priorities, Music City can make the most of its existing built environment.