Sure, NYC’s Empire State Building makes a fine list-topper as America’s favorite piece of architecture.
But it ain’t my favorite — that’d be LA’s 2121 Avenue of the Stars, a gleaming 34-story beauty that holds two secrets:
- Its unofficial, fictional name, Nakatomi Plaza (AKA the setting of Die Hard).
- It’s actually pretty empty — it has 186.9k square feet currently for lease.
It isn’t alone on the latter one. In the 10 largest US markets, ~50% of office space sat unoccupied in June, per Investopedia.
We’re in the thick of a commercial real estate crisis — one in desperate need of a hero.
John McClane = housing conversions?
A new paper from the National Bureau of Economic Research (NBER) lays the groundwork for shifting America’s underutilized office space into much-needed housing supply, per Insider:
- The NBER team found that ~11% of office towers in the 105 most-populous US cities could be converted into residential properties.
- The report outlines 2k+ “zombie” office buildings — empty and unrentable — that could be turned into eco-friendly 200-unit apartment towers.
The best-case scenario would add 400k homes to the market, making a dent in the millions of units needed to steady the housing crisis.
Could it really work?
… Yeah, seems like it. Bringing these zombies back to life could make financial sense:
- It can be cheaper and quicker to retrofit existing structures than to start from scratch, anyway, but 2022’s Inflation Reduction Act also incentivizes green building — if the new homes meet efficiency standards, they could qualify for $10B+ in federal grants.
- The opportunity is particularly massive in NYC, SF, and LA, which have the most towers fitting NBER’s residential conversion criteria — and an insatiable demand for more housing.
The first step: real estate leaders fully accepting that the combo of remote work and high interest rates mean commercial tenants (like, say, the Nakatomi Corp.) aren’t coming back anytime soon.
