Converting commercial spaces into apartments is not as easy as it seems
With the local commercial office market reporting some of the highest vacancies in Australia, residential vacancy rates remaining low and future residential supply limited due to costs and other issues, many are beginning to wonder why unwanted office towers cannot be converted to residential use.
The COVID-19 pandemic has changed work habits for many around the world, with the Property Council of Australia saying vacancies are at their highest since 1997.
As many employers and landlords reassess the performance of these office and commercial spaces, there is a potential surplus that will be available for residential conversion.
However, every market and city is different – Perth has already seen residential conversion of existing buildings, including former warehouses in Fremantle and Northbridge, while Australia’s largest cities, Sydney and Melbourne, have seen conversions residential developments such as hotel repurposing and even the Finger Dock redevelopment at Sydney Harbour.
There are various factors as to why a developer would want to retain an existing structure for conversion, such as a heritage look or an appearance targeted towards a niche market of buyers interested in building refurbishment or new-style warehouse living. -yorker.
However, there are many issues for developers considering existing buildings for potential conversion into apartments.
The approval process is the main hurdle and would require local and state government support to add any significant potential supply from existing office towers.
Additionally, many commercial buildings constructed over the past 50 years are simply not suitable and will not work for long-term repurposing, with ceiling height, available light and natural ventilation not meeting requirements and standards. requirements of modern apartment design.
Especially with more modern office buildings, where large floor plates have become the norm and the distance between the elevator column and the facade is significant, it is almost impossible to design apartments that receive enough natural light.
Existing office buildings generally do not contain, or permit, sufficient parking spaces for residential purposes. Compared to Melbourne, Sydney or other major cities around the world where parking is not always a requirement for apartment developments as people are used to public transport and existing infrastructure to alleviate parking issues , most of us consider using a car essential here in Perth.
There is also the issue of cost and time, with demolition and new construction often being quicker than having to retrofit an existing structure to make it suitable for apartment living.
If major remedial measures, heritage issues or extensive building alterations are required, redevelopment costs can rise rapidly, with some experts estimating that it could cost 20-30% more to modernize office buildings than to demolish and build apartments.
It is often older Class D office buildings that are the most suitable for residential conversion, as they are the least attractive to office tenants in a market where premium space is becoming available at reduced prices, as well as l the building’s physical envelope being relatively smaller than newer office towers.
However, with older buildings, systems are often obsolete and nearing the end of their natural life, so a developer still needs to replace and upgrade mechanical, plumbing and electrical systems and wiring – while retaining the existing facade and structure. intact.