Commercial property landlords and real estate investors across New Jersey and New York are often eager to purchase low-priced properties. In recent years, office spaces, in particular, have dropped in value. This nationwide trend has hit the East Coast particularly hard, with office spaces sitting vacant for months in many cases.
Even reductions in rent may not be enough to attract reliable tenants. Frustrated property owners and investors don’t have to sell their properties at a loss because they cannot find commercial tenants. Instead, they may need to consider ways to maximize the return on their investment. For example, there has recently been a trend wherein owners convert office buildings into residential apartments or condos. Doing so can be lucrative, but real estate owners and investors should be aware of the challenges that could arise.
Zoning nightmares
In New York City, there are currently programs aimed at facilitating the conversion of office buildings to residential spaces. In many other areas, rezoning an office building to convert it to residential space can be a very lengthy process. Rezoning typically requires a lot of work and research. Even securing a zoning variance can be unpredictable and costly.
Massively different facility requirements
The environmental controls, safety systems and other building code requirements for office buildings are substantially different than the requirements for residential spaces. From egress options in the event of an emergency to the availability of electrical outlets, there are many major changes that must occur throughout a property to turn what was once office space into residential units that meet the current code. There can be a lot of reworking and investment required in everything from the electrical system to the heating and cooling systems for the building.
Meeting aesthetic expectations
Those renting brand-new apartments and those investing in condos or similar properties often have specific aesthetic expectations. A landlord or investor previously focused on commercial properties may have a lot of research to do to create appealing residential units. Trends come and go, and investors or business owners need to take care to ensure they walk that fine line between forming to short-lived trends that can make properties feel dated and creating timeless but appealing interior spaces. Design considerations for residential properties are vastly different from the needs of business tenants.
If an office building conversion is successful, it can turn a floundering real estate investment into a major source of revenue. Having the right guidance during the complex conversion process can make a big difference for those hoping to maximize their return on currently unused office space.