Office Conversions Will Probably Not Save Office Buildings From Demolition

According to an article just published August 17, 2023 n Bisnow, “…conversions had been largely characterized as a drop in the empty-office bucket. It may seem like an extreme step, but as expectations for full Class-B and C offices crumble and renovation costs climb, demolishing buildings to free up the land under them for a new use is gaining traction.”  There will be an immense amount of transitional pain before this occurs in large numbers. Owners and their lenders will be in denial for possibly several years, hoping employer mandates will force employees back to the office in large numbers and cause office occupancy to rise. There will be attempts at gowing food in office buildings, converting single-floor flex buildings into pickelball centers, and to a very limted extent conversion to lab or residential, although most buildigngs are not physically or economically convertible.  If the office complex is on a decent-amount of land and close to major trasportation arteries it may be an excellent candidate for demolitionand new industrial warehouse consturction. In my regon of San Ramon, Northern California we have seen a 535,000 square foot Class A office complex torn down for new housing, and the Chevron Park, a 1.6 million square foot office park, is planned for demolition to make way for new residential development. Tenants relocating from buildings planned for demolition relocate to partially-vacant nearby office buildings, thus making these buildings more viable as they get leased up. As a career office tenant rep specialist this transition will be very painful to me personally to witness…