"Two years ago, state and local governments pushed to fast-track conversions of near-empty offices into much-needed apartments to alleviate a housing crunch. The promised panacea never eventuated. Momentum to create homes out of empty offices has faded even as office vacancies rise and housing shortages intensify. Developers have not submitted a single application to turn an office into housing in central Melbourne since 2023. Just one successful application has been made in the CBD of Sydney, the country's most unaffordable city."
"Towers have proven expensive to refit and landlords have instead kept their properties in the office market, awaiting either a return of workers or government funding to make conversions stack up. One landmark 2023 study found Melbourne had 86 city office blocks ripe for redevelopment and converting just half of those would yield up to 12,000 apartments. The Victorian government promised to help facilitate the conversion of the offices."
Momentum to convert near-empty offices into apartments has collapsed despite rising office vacancies and a severe housing shortage. Developers have not lodged any applications to convert offices to housing in central Melbourne since 2023, and only one successful application has occurred in Sydney's CBD. Towers are expensive to refit, so many landlords keep properties in the office market while awaiting a return of workers or government funding. A 2023 study identified 86 city office blocks suitable for redevelopment; converting half could yield up to 12,000 apartments. A refit of one block showed an estimated developer profit margin of only 0.05%, deterring conversions.
#office-to-residential-conversion #housing-shortage #commercial-real-estate #melbourne-redevelopment
Read at www.theguardian.com
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