A tale of two offices markets (part two): Can conversions solve the surplus office problem?
In Manhattan, the Vanbarton Group is in the process of converting a 24-story office tower at 160 Water St. to a premier apartment building. The new project will add five new floors to create 588 units. Across the country, Hines is transforming the 217,000-square-foot South Temple Tower in Salt Lake City into a 255-unit luxury multifamily tower. Its conversion plan includes stripping the existing office building to its core and shell and repurposing the building structure to create an efficient residential floorplan.
Such conversions are by no means a new idea, but they are getting fresh attention as a solution to the growing supply of obsolete and underutilized office buildings. Nearly one-fifth of the office market in the United States is empty. According to CBRE, the average vacancy rate in the United States climbed to 18.2 percent in second quarter 2023. Many believe the overall size of the office market needs to shrink, with older and less desirable buildings either repur