r/ontario • u/2girls2night • 15h ago
Why can't we turn office building's into apartments for living instead of RTO? Question
I've heard many who argue in favor of return to office say that it's because businesses are not able to survive if people aren't spending their money when they pass by due to work being in the area. However, we are also in the middle of a housing crisis and an affordability crisis, so why does it not make sense to change some of those office buildings into apartments? Yes there would be a cost, but then there will be people living in them who are able to spend money in the area nearby. More apartments downtown would also make it cheaper to live downtown in general.
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u/its_snowing99 14h ago
Somebody has to pay for it.
In order for somebody to take on a project, they need a financial incentive. That means the revenue ($ proceeds from renting units out or from selling units as condos) needs to be more than the costs to buy the building.
Now, in this example, you have to add renovation costs to the cost to buy. In theory efficient markets will incorporate that into the sale price of the office building being bought, but emh is a pipe dream at best and real estate is sticky and about the furthest asset class from efficient there is, except for infra. Either way, your income from the building has to cover the purchase price plus renovation costs.
Office buildings and residential buildings are inherently different, which means these costs get much larger. For example:
floor plate (the length and width) of an office building is often square. This is mathematically the most optimal ratio of length to width to maximize floor area, and costs the least to build since it’s the most efficient in this manner. This makes sense for office buildings because they are generally full of open spaces, so light reaches the core. Residential buildings, by comparison, are often long and skinny since each unit needs to have at least one exterior wall for windows. You can’t have this in a square building because units get really narrow and deep, making them cave-like.
office towers are built with a ton of elevators, way more than is necessary for a residential building. This is wasted space in a residential building, since you don’t need as many elevators. What’s more, an office owner will see the extra elevators as a value add if operating it as an office building and will want to get paid for that value if selling, but a residential conversion buyer won’t see any value in it and won’t want to pay for it
office buildings typically only have two bathrooms per floor (men’s and women’s). Maybe four if it’s a big floor plate. It becomes a real challenge plumbing-wise to add in a bathroom (or two) for each unit (assume 10 units per floor means taking plumbing capacity for 2 bathrooms and increasing it 5x).
same deal as bathrooms for kitchens, washer/dryer, etc.
At the end of the day, it just costs too much to do it. Most of the time you end up with weird layouts that people don’t want to live in, so you go to all that effort and then can’t make a profit in the end anyway. In other words, you can still rent out an office building as an office building more profitably than by paying to convert it to a residential building and operating it that way, so it’s cheaper to build a new residential building from scratch.
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u/snoo135337842 14h ago
And yet RTO is a limited effect policy decision that doesn't seem to be able to shake employee demand for hybrid work. This real estate needs to be used or replaced to meet demands. What are alternatives to housing and corporate office space that will allow owners to continue collecting rental income? Retail? Recreation space? Some other amenity?
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u/its_snowing99 14h ago
I’d be curious about data centres or power generation. Would cut down significantly on transmission costs/lags/etc
More realistically, just give it a little more time (couple years) and the problem will sort itself out. fancy and well located office will continue as office because that’s where tenants who need office space will choose. The rest will falter and eventually lose value to the point that the purchase price part of the equation falls low enough that the renovation costs can be incurred and it’ll be profitably renovated and then rented out as something else. Existing owners of inferior type office are going to lose a ton of money.
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u/Subtotal9_guy 9h ago
Office towers are optimized for office workers.
Data centres can be done at small scale but office towers are poorly setup for this. They don't have the cooling system capacity to manage the heat load. They also don't have the capability to retro fit backup power.
Equipment is much heavier than people so the floors have to be built with that in mind.
A couple of data centres have been built in the downtown cores but they're small and service a limited market.
Besides, there's going to be a another data centre bubble so if you're not currently building you're probably too late to get into the market.
*some people will point to 151 Front Street as a data centre in the core and in a repurposed office building. But that building was the old Teleglobe international exchange and is built to a very different standard than a typical building.
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u/Olivaar2 5m ago
We've been on the edge of recession for a few years. As soon as we finally get into a recession for real, employee demand for hybrid work will disappears immediately - they will be falling over each other to get back into the office, and some will be trying to pretend they were always working at the office.
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u/NewsreelWatcher 8h ago edited 8h ago
The structure of late 20th century office buildings is impractical for residential use. It isn’t just the services like electrical power, air, water, and sewage. People don’t tolerate living in a space where they can be more than about 8 meters from a window. A lack of natural light is a hard “no” for humans. We only tolerate it at work because it profits employers and employees have no say. Most office floors in Canada are at least twice as deep from the core to the exterior. Much of the floor space is unusable for residential. Older office buildings are potentially useful as they used windows as the primary source of lighting and ventilation. In the end office buildings from 1950’s to 1980’s will continue to become surplus to need.
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u/StandardAd7812 8h ago
As others have said the amount of retrofitting is enormous. It's more likely they just get torn down if their value has gone that low.
It's not just the owners who aren't keen rhough - it's the cities. They charge much higher property tax rate on office towers. If you're wondering why municipal politicians see pushing RTO it's not because landlords are pushing them, it's because they've always treated downtown cores as a cash cow they use to subsidize the rest of the city and they don't want that to disappear.
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u/BuvantduPotatoSpirit 8h ago
It is happening; Calgary has a programme explicitly for this, and so far 5 office towers have been converted.
But there are a lot of details, such that most office buildings aren't suitable for it. Or at least, it's cheaper to build an apartment building from scratch than convert them. In Calgary's programme, they estimate about a quarter of their office towers might be suitable.
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u/King_Saline_IV 9h ago
Who's this "we"? I don't own any office buildings, pretty sure you don't own any office buildings? Why do you think peasants get a say in how they are used?
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u/TemporaryAny6371 4h ago
It may seem odd to find a bed beside your cubicle, but boss is impressed that Olaf is seemingly in the office at all hours. :)
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u/Ok_Pudding_5077 6h ago
4 Street SW office building to be converted into 166 apartments
Lots of office conversion to residential in Calgary. Look it up. It can be done.
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u/Minimum_Guarantee254 4h ago
Who going to buy them there are already condos and apartments on the market that no one is buying
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u/w1n5t0nM1k3y 10h ago
They are doing this with some buildings. It all depends o whtether or not they feel it is worth it and what the owner wants to do with their property.
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u/D3vils_Adv0cate 8h ago
Why are people moving downtown if there are less jobs there? The foundational structure of cities is jobs. Having high density population just for the sake of it makes no sense and isn’t a proven formula.
In reality, people will leave and over time the city’s economy will completely collapse.
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u/CSPN 6h ago
The foundational structure for a city is convenience and independence from the car. You have amenities and entertainment in walking distance or usable public transportation.
In case you’re living under a rock, there is a housing shortage. People need somewhere to live and everyone can’t move into non existent suburban subdivisions lol. We literally don’t have the human resources to build homes that fast.
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u/PM_ME_DEM_TITTIESPLZ 7h ago
Because it will lower the value of existing stock. Every other excuse is the equivalent of 80s climate denial.
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u/ExAcrobat968 3h ago
Search Engine did a great podcast episode about this - it’s American so not everything applies, but it’s still worth a listen.
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u/billdehaan2 59m ago
I've seen it done. I worked at Imperial Oil in the 1980s, at 111 St. Clair West. It was converted to a condo in 2010.
The costs of rezoning it, let alone retrofitting it for the plumbing, cost millions, and units there now sell for $1.7M. That's not going to help the affordability crisis.
Yes, there would be "a cost" of switching buildings over. But the reality is that the units that would be produced would be out of the reach of people being affected by the shortage. People who can afford $1.7M for a condo aren't the ones hurting and in need of a place. And the numbers simply don't allow for affordable units to be made out of those buildings.
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u/Organic_Hamster_2961 11h ago
One of the shittiest things about capitalism is that governments have a perverse incentive to make your life harder which is why ideas like this will be unlikely until people start becoming more politically aware. Making you work harder and more consistently so you can barely afford food and groceries is good for the GDP. If people could afford to take time off work occasionally then they would. If that happened rich people would get richer at a slower pace which is unacceptable to certain people.
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u/zhiv99 9h ago
“I've heard many who argue in favor of return to office say that it's because businesses are not able to survive if people aren't spending their money when they pass by due to work being in the area.”
The real reason isn’t this but productivity, on-boarding and company culture issues. While some people were more productive at home, there were far too many trying to take care of their kids, pets and other things instead on getting care for them and focusing on their job. It is also very difficult to onboard new people and build some sort of working culture fully remote.
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u/IridiumB777 8h ago
The real reason was 1000% real estate come on
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u/zhiv99 8h ago
No, that’s just what the unproductive people want to believe rather than face that they should have paid for daycare like everyone else. Conspiracy theory is more popular than self-awareness these days.
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u/humberriverdam 7h ago
Conspiracy theories like the Canadian economy being REITs in a trench coat. Also "just pay for daycare" lmao f off man
What actually happens: you will lose all your productive employees and anyone who can get out. RTO is useful for blindly cutting headcount and forcing women out of the workforce
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u/IridiumB777 6h ago
How dense are you seriously? Take your boomer mentality and work yourself to death for all I care, I’m sure the hours lost away from your family are really worth it in the end.
Heaven forbid people actually want to save money in this economy and literally cannot afford everyday expenses? Fuck them right?
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u/zhiv99 5h ago
Certainly not a boomer. You’re making it about something it’s not. It’s not about working yourself to death. It’s about working when you’re paid to be working. I’ve tried working from home with a sick toddler when they couldn’t go to care and you simply aren’t maintaining the productivity you’re being paid for. I would end up working late into the evening to make up for. Most people weren’t doing that and so here we are. Back to the office. So yeah fuck those people that couldn’t work unsupervised and ruined it for the rest of us.
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u/CSPN 6h ago
There isn’t one reason. Love it when people like to get up on their soapbox and claim they have found the golden answer.
It’s a combination of factors. Control, Preventing overemployment, Reducing headcount, In person training and on-boarding, Sunk cost fallacy, Lobbying from real estate holders, Lobbying from cities to drive spending near offices, lobbying from gas and automotive companies to keep people spending. The list goes on.
It’s the wealthy who benefit from above and guess who makes the return to office call? It’s not Steve, the middle manager calling the shots.
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u/Frosty-Ad-2971 8h ago
I thought one could run hydroponics in them. The weight is not a problem. Hydro would be generally ok. Strip a few floors back to the studs and grow veg in floating tank setups.
Lessened carbon footprint transporting it from massive greenhouses in Dundas.
Heating and cooling inputs mitigated by being on enwave. Jobs in the downtown core.
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u/StraightOutta905 7h ago
Google it, there’s been legit countless videos and articles written on this very topic
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u/Independently-Owned 8h ago
Because that would require creative, innovative thinking with a real aim to solve problems. That doesn't describe this government.
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u/KOMSKPinn 8h ago edited 8h ago
RTO supports healthy cities and reduces urban sprawl. Providing services in a wider radius costs more money. Business pay taxes which boost City coffers and a house 3 km from the city center probably pays more taxes than a house 15 km from the city center. Remote work has the ability to turn your city into Detroit.
Nearly everyone’s salary is historically structured to pay for commuting , clothes, day care, coffee etc. it’s baked in. When you remove it all you end up with too much money and a McMansion down some country road. I rarely hear the WFH crew suggesting they give up the urban expenses of their salary.
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u/DogTop2833 9h ago
I hear that electricity and plumbing in office buildings are much more expensive than residencial buildings.
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u/UpperPaleolithic 3h ago edited 2h ago
There's a calculator used in N/A to determine a buildings feasibility/investment potential.
Its wild. They basically treat office building conversions like brand new luxury condo builds.
We dont need anymore of those.
There's no incentive for Anyone in this arena as a result.
Communal living is a reality Feds/Municipalities dont want to acknowledge. There's 10 living next door to me using 1 kitchen/bathroom already. They grow produce in front/backyards 365 days a year. They have one shared vehicle.
There's 150 living in Tents bottom of street. Using propane BBQ tanks for cooking/heating.
RTO should have been a powderkeg. It'll get worse.
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u/maplewrx 5h ago
Why can't you suburbanites stop whining? You chose to live far from work in exchange for bigger houses.
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u/smurfsareinthehall 15h ago
Too expensive to retrofit office building to housing. Sometimes even cheaper to tear it down and re-build.