Today is the last class in our current eight class set. We will talk about NYC real estate.
SYLVIE DOUGLIS, BYLINE: NPR.
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STACEY VANEK SMITH, HOST:
So, Adrian, back in, I guess we call them now the before times, I went to an office every single day.
ADRIAN MA, HOST:
I can vaguely recall doing something like that as well.
VANEK SMITH: In another life, yes. And, I mean, you know this, Adrian, but the NPR New York offices are just, like, in the thick of midtown Manhattan. It's just one of the areas of New York that's, like, skyscraper after skyscraper after skyscraper and just super-noisy, super-crowded - taxis, tourists, people in suits rushing around, talking on their phones. That has really changed.
VALERIE CAMPBELL: Midtown is basically, you know, completely dead.
MA: This is Valerie Campbell. She's a real estate lawyer in New York. And she says these days, midtown Manhattan is eerily quiet.
VANEK SMITH: Yeah.
CAMPBELL: Right now I'm sitting in - you know, in a large building on Sixth Avenue, and there's one other person who's in on my floor. Everyone else is working remotely.
MA: So the building is pretty lonely these days.
VANEK SMITH: At the same time, Valerie's business is booming. Valerie specializes in real estate conversions. That is turning one kind of property into another kind. And right now, all of those empty office towers in New York have developers salivating, wanting to convert them into apartments.
MA: This is happening all over the U.S. as companies downsize office space, more people work from home or have hybrid work situations, and demand for housing continues to rise.
This is THE INDICATOR FROM PLANET MONEY. I'm Adrian Ma.
VANEK SMITH: And I'm Stacey Vanek Smith. Today on the show, living at the office. Adrian, it is not just a bad joke anymore. It is a thing that is happening - how the pandemic and the economic fallout from it are changing the landscape of U.S. cities. Also, the rise of the apartmenticle (ph).
MA: The apartment - apartywhatie (ph)?
VANEK SMITH: We'll get there. We'll get there.
In the last couple of years, nearly 15,000 offices across the U.S. have been converted into apartments. It's been concentrated in cities like D.C., Philadelphia, Cleveland, Los Angeles, Kansas City, Mo.
MA: Lara Schneider is an architect at Clockwork Architecture and Design in Kansas City. And she says for most of her career, her work was almost exclusively designing office buildings.
LARA SCHNEIDER: In the last 25 to 30 years, there was a big push to add a lot of class-A office space to Kansas City.
VANEK SMITH: But now a lot of that primo class-A office space is just sitting empty. Only around a third of office space in the U.S. is occupied right now.
MA: So many dead office plants.
VANEK SMITH: Yeah, so many dead office plans. So now Lara and her colleague, architect Christian Arnold, are getting tons and tons of requests to redesign that office space.
CHRISTIAN ARNOLD: Kind of starts to say what can happen to these office buildings because they're - you know, they're substantial 10-, 20-story buildings. They're not just going to be torn down, so they're going to be adapted into something. Demand kind of drives that possibility.
MA: That is demand for housing, because at the same time demand for office space has basically vanished - you know, poof - demand for living space is booming. Housing prices are at record highs across the U.S., and rental prices are up more than 10%.
VANEK SMITH: Not to mention that office buildings have some very attractive qualities for developers. Often it's very high-end construction, good quality, also parking spaces, which is apparently a huge deal. But mostly, says Lara Schneider, office buildings have what is basically the Holy Trinity in real estate - location, location, location.
SCHNEIDER: The biggest desirable factor is the fact that you're downtown. There's been a huge push, especially in younger professionals, wanting to live downtown. And previous to COVID, they couldn't.
MA: Tell me about it. A lot of cities were experiencing this - a housing shortage, especially in the heart of the cities, where a lot of young professionals wanted to live. There just wasn't enough housing supply to meet demand.
VANEK SMITH: Yes. And increasing that supply, i.e., building new housing, was really expensive. And now there are all these buildings just sitting there empty.
SCHNEIDER: Now, if you have some buildings that are sitting empty that are already built, you know, you're kind of already one step ahead to try and meet that demand.
MA: But Lara says a lot of times her firm will be asked to look at an office building, and they'll decide they just can't turn it into a decent living space.
SCHNEIDER: It is very challenging to get these buildings converted. It's not as plug-and-play as I think everyone would hope it would be.
MA: Lara says these spaces were not designed with a home in mind.
SCHNEIDER: Ideally, a multi-family building would be more rectangular-shaped to maximize the glass. And a lot of what we're seeing is square buildings that are super-deep.
VANEK SMITH: The cubicle farm.
SCHNEIDER: Yeah. You're trying to give all of the daylight to the living spaces. So I would say our space planning is getting very creative.
VANEK SMITH: And you see this, in fact, when you look at these converted apartments. I've taken a bunch of online tours of these spaces, Adrian, and what you see is, like, there are a bunch of rooms with no windows or, you know, rooms that have very strange layouts or even windows that look out into other rooms in the apartment, just, like, trying, trying to access some natural light.
MA: Ooh. That sounds bleak.
SCHNEIDER: But it's crazy how, you know, the developers aren't very concerned about it. They say they still lease up.
VANEK SMITH: They still lease up. Right now, housing is in such great demand that people are willing to let a lot of things slide that they might not have before, you know, as long as they can get a place right downtown - an office with no window, like, your trapezoidal bedroom, a room with a window that looks out into the living room where there's some sunlight way off into the distance down at the end of a hallway. Why not? Hey, at least it comes with a parking place (laughter).
MA: Yeah. I think city living has a way of making people adjust their expectations.
VANEK SMITH: Oh, yes.
MA: And, of course, these are just the architectural challenges, right? There are also legal challenges that come up when you're trying to turn workspaces into living spaces. Like, remember real estate lawyer Valerie Campbell, who goes to work in the nearly empty office building? She says more and more people have been asking her how to turn skyscrapers into apartments. And that presents a lot of issues, like zoning.
CAMPBELL: The zoning resolution of New York City is, I think, over a thousand pages.
VANEK SMITH: (Laughter) Are you serious?
CAMPBELL: You also have to have familiarity with the building code of New York City, the multiple dwelling code, and the rules and regulations of the Landmarks Preservation Commission.
VANEK SMITH: In other words, you need a lawyer. And that has been great news for Valerie. Her business, she says, has doubled. And she says lots of empty office buildings and hotels are being converted in New York right now, including the iconic 60-story Woolworth Building, which has been full of worker bees since 1913.
MA: Valerie says right now there's so much demand for housing in downtown areas and so many empty offices that New York is considering a bill that would fast-track these kinds of conversions, especially affordable housing.
VANEK SMITH: Valerie says the last time she saw this kind of conversion demand was decades ago, at a time when the need for factory space was going away in a lot of cities and affordable housing was in short supply, back when the loft apartment was born.
CAMPBELL: First you saw neighborhoods like SoHo and NoHo and Tribeca, where you know, older manufacturing lofts were converted to residential spaces - sometimes legally, sometimes illegally.
VANEK SMITH: Valerie says lofts also presented a bunch of challenges. For instance, they had super-high ceilings and big windows, which was great, but often they had no rooms. They were just like a big, open, kind of barn-like space. But that soon became trendy. It became a feature instead of a bug, and designers embraced it.
MA: Now, of course, the loft is a real estate staple. People pay a premium for them. And whether the office building conversions will see that kind of demand is TBD, says Missouri architect Christian Arnold. After all, commercial leases tend to be years long, and the new normal for office work is still pretty uncertain in a lot of places.
So, Stacey, I guess that does leave us with a pressing question.
VANEK SMITH: So these don't have, like, a name, like a loft or something? - because I feel like real estate is so good at developing names to make things sound appealing.
ARNOLD: We need to brainstorm. Yeah, you're totally right.
VANEK SMITH: OK, Adrian, I have two ideas here for possible names for these kinds of apartments.
MA: OK. I'm listening.
VANEK SMITH: Cupartment (ph).
MA: OK. Cube...
VANEK SMITH: Cubicle farm - cupartment. Or - OK. Don't like that one? I've got another one - apartmenticle.
MA: Ooh.
VANEK SMITH: Like cubicle - apartmenticle.
MA: Apartmenticle kind of rolls off the tongue.
VANEK SMITH: As long as you don't mind saying it in the dark in your trapezoidal bedroom, then I think it's fine.
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MA: This episode is produced by senior producer Viet Le, with help from Isaac Rodrigues. It was fact-checked by Corey Bridges. Our editor is Kate Concannon, and THE INDICATOR is a production of NPR.
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