Office to Residential - September 2023
Will Alaska/Anchorage see office-to-residential conversion?
Despite being on an island up here in Alaska, I do my best to keep my finger on the pulse of trends nationally and globally. Recently, a common headline and talking point has been the desire to convert office space into residential use. On the surface, it makes sense. There is a need for affordable housing in many communities, paired with reduced demand for traditional office space.
However, some sizable hurdles exist before we see large-scale conversion/redevelopment.
In no particular order:
Plumbing and lack thereof
Health and safety (sprinklers, ingress, egress, air quality, etc)
Access to sunlight
Municipal and state restrictions
If markets like NYC, Boston, and San Fransisco are having trouble getting these conversions to pencil with huge 50,000sf - 80,000sf -100,000sf+ vacancies, I expect it will be challenging to make the math work here in Alaska anytime soon.
As far as I know, there isn’t anything coming down to the pike on the federal level in terms of subsidies or incentives. So, despite my willingness to do deals or explore this market segment, I’m personally filing it under the wait-and-see category.
I have heard rumbling about one redevelopment going on here in Anchorage, but it's closer to a rumor than reality. It sounds like the building will be converted to luxury apartments/condominiums. If and when that comes to fruition, I'll follow up.
If you’d like to learn more, I’d recommend the podcast “What It Really Takes to Convert and Office Building Into Apartments” from the “Odd Lots” podcast—link & episode below.
Do you think we'll see robust conversion (office-to-resi) nationwide? Do you know of any redevelopment plans (office-to-resi) in the state? Want to get your office building on the market to see what the market is saying? Shoot me an email/text or give me a call!
Did you know of the 11,103 commercial parcels in Anchorage, 1,072 have the designation Office Building Low Rise (544), Office Building High Rise (45), Office Condominium (53), and Office Warehouse (430)? That's 9.25% of all commercial properties in Anchorage.
Sensual pie chart below: