With a critical housing shortage, and plenty of vacant office space, does converting offices to apartments really work?
Melbourne’s CBD office vacancy rate rose to 16.2% for the June 2023 quarter (according to JLL research). At the same time the apartment vacancy rate is a desperate 2.6% (SQM research)
No brainer right? Well I wish it was that simple.
Property Veteran Max Beck said it best in an interview with The Australian when he said.
“It’s a great idea but there are some serious issues to actually do what you’d need to do to convert them. You might find 20 percent of these buildings could work.”
If you think about a typical office building, it has the lifts in the middle or on the side, then fire stairs and toilets next to that in what is called the core. Then the rest is just a concrete slab and pillars out to a glass wall (typically)
At a specific apartment design level there are a few challenges. Firstly, it is difficult to get natural light into the centre of the building unless it’s floor plates are narrow. Without that, bedrooms and living rooms are on the outside, and there is a lot of dark or wasted space between those rooms and the centre. Also, there is often not enough ceiling space for plumbing to bathrooms and kitchens. Or the plumbing is exposed and noisy. Apartment design guidelines require natural cross air ventilation. Then balconies or outdoor spaces need to be attached somehow assuming the building is not built to the title boundary.
At a broader building or design level there are more challenges with things like lifts, fire regulations, car parking capacity and access, communal areas, privacy from adjoining buildings, landscaping, and separately metering services. The local capacity of services such as power, water and sewer need to be able to service the apartment building demands. And what if you want it to meet modern-day requirements like electric vehicle charging, waste recycling, solar power, environmentally sustainable design?
The final product then needs to comply with all the criteria of Victoria’s Better Apartment Design Standards.
See the problem? And we haven’t even started to think about the cost and end value of the apartments to figure out if it works financially.
Converting offices to apartments is definitely possible. It’s just a bit tricky. That’s all.
Converting old offices to apartments happened a lot in the 90’s when the Melbourne’s office vacancy rate hit about 30%. At that time there were no apartments in Melbourne’s CBD. None! Incredible eh! Also, there wasn’t the same apartment design regulations there are now. However, the challenges then were the same as they are now. Some of those 1960’s or 70’s buildings had to remove asbestos and deal with structural issues.
It is worth exploring ideas to see what other options there are. Most other residential options like student accommodation, social housing, hotel, or dedicated short stay all present the same challenges of amenity and feasibility (design and financial).
Maybe if the apartments are large and luxurious with only 2 or 3 on each floor it could work. Or multi-level apartments with internal stairs.
Property developers are very creative and if there is some way to do it for apartments or some other use, they will figure it out.
