Change is a common – overused word, but 2020 is certain to bring far-reaching changes to the commercial real estate industry. Experts are analyzing the impact of the global economic downturn on the entire property industry. The biggest names in this business are now seizing the opportunity to change and reshape the commercial real estate landscape to their advantage.
Although the impact of Covid has yet to be fully revealed the damage done to commercial buildings is already evident with many businesses closing for good. The lockdowns affected almost everyone and many companies were unable to reopen due to loss of incomes. Now, these buildings may end up being assigned to residential purposes.
More and more initiatives are aimed at transforming disused buildings into much-needed housing. It is hoped that these changes will help revitalize cities and their centers that have been badly affected by the coronavirus, allowing homes to be quickly reallocated for residential use, supporting local housing needs, and relieving pressure on green belt land.
Of course, the solution will not be quite so simple, but it is to be hoped that the housing crisis may receive some positive relief from the negative impact of Covid.
The future of office buildings
It may be that changes to the planning rules require that new buildings must include both residential and office buildings as standard. Regulatory processes could also be facilitated by speeding up permits and sharing the costs of installing the utilities needed to convert them into residential buildings.
Remote working frees up space
Provided the land available can accommodate these changes, places previously used for office spaces can now be converted into housing units. More employees are working from home due to the virus causing social restrictions and lockdowns.
It could be that companies use this format of working more in the future. By letting workers stay at home they can reduce the amount of office space needed and sell off some of their equity.
Less demand for office space
It is expected that there will be a renewed increase in the use of office space for residential development. It is likely that due to business failures, unemployment and new working practices the demand for office space will fall.
You can already see this and will probably see it even more as the increasing ability to work from home could make more affordable housing more popular as commuting times become less important. With the transition from office to home, larger, more creative apartments offer space for both the home and the office.
New trends in the property market
There are a number of new trends in the development of new office space in major cities that could attract the attention of housing investors interested in this change of use.
Cities can seize this opportunity to capture unused space and meet market needs by reinventing inner areas that are subject to old market trends and building codes that impede accessibility while providing incentives that make conversions more attractive to developers.It could be that more people decide to take out a property development loan to convert these buildings and join this growth area.
Can help to bring in more people and improve areas
Converting office space into affordable downtown housing is a natural consideration and will appeal to policymakers to promote population and tax growth and address long-standing inequality problems in urban life. Once a developer finds the right business property to buy they can help improve the area and attract more people.
Bringing in new policies will speed up conversions
Developing new policies along with enticing incentives will encourage the conversion of unused commercial and retail space into much-needed housing. This will go some way to achieving long-standing goals of creating affordable housing that is much needed in deprived or abandoned areas.
Conversions aren’t restricted to just housing
Converting empty offices and retail spaces isn’t just for homes. An office building could be converted into a hotel. The infrastructure is mostly in place and will just need sanitation and some other systems installed.
There are many benefits to converting office or retail units into housing. It will free up wasted equity and developers make money, stop buildings from falling into disrepair and becoming eyesores, and will aid in providing homes for people in need. It makes perfect sense for local governments to provide incentives for developers to go down this route and find other uses for wasted office space.
With more businesses struggling and remote working becoming more popular and easily accessible there will be less need for purpose-built working spaces. Modern homes made out of these buildings may indeed include a home office area as this way of working becomes the norm.