00:00 While many of us are now back in the office, working from home is here to stay.
00:05 For instance, 35% of US workers who can work from home still do.
00:10 But vacant workspaces aren't a new problem.
00:14 Long before the pandemic, aging offices were already becoming less desirable.
00:19 Because there had been for about the last 10 years a trend that we called flight equality.
00:25 Steven Painter, an architect at one of the world's biggest firms, focuses on adaptive reuse.
00:31 People weren't renewing their leases in older buildings, they were going to the new ones that were being built.
00:36 Because they offered the kind of amenities, the kind of locations people wanted.
00:40 All these empty offices aren't just a waste of space, they mean less rent for owners, lower tax revenue, and the decline of entire neighborhoods.
00:49 We have beautiful buildings, we have the wonderful plazas, we have sort of all of the physical assets.
00:55 We just have vacant buildings, and so you don't see that vibrancy.
00:59 You used to, you know, kind of look down these key corridors and you would see just streams of people, you know, coming down the street.
01:06 And you don't see that as much anymore.
01:08 Lily Lungloey is a planner in San Francisco, another city addressing high vacancy levels.
01:13 Almost 95% of our tax revenue comes from business tax from downtown.
01:20 About 80% of our GDP came from downtown companies in 2021.
01:25 It is our economic engine, and so it needs to thrive so the city can thrive.
01:31 Roughly a third of offices are vacant in the city, the third most expensive housing market in the U.S.
01:37 At the same time, the construction of new housing is causing a whole different host of problems.
01:43 Construction accounts for 13% of global energy-related carbon emissions, more than five times that of the aviation industry.
01:51 In order to meet climate targets, but also other sustainability targets, we will need to actually stick with what's already built.
02:01 Pernilla Hagbert researches urban sustainability at Stockholm's Royal Institute of Technology.
02:07 Even if this new production of housing and buildings is done with very energy-efficient and optimized technologies, this won't be enough.
02:18 We will also need to reduce the total amount of new production.
02:24 And this is what brings us to Frankfurt.
02:27 Here, an office tower built in the 1990s will soon be reborn as around 150 furnished apartments.
02:35 Benjamin Albrecht, the developer's regional European head, believes it's the way forward.
02:44 The environmental factor is obvious since the building's shell is already standing.
02:49 The shell alone usually accounts for about 50% of emissions during construction, a fairly significant portion.
02:58 But it doesn't only save on emissions.
03:01 Revamping an office building can be up to 30% cheaper and construction can be done in half the time.
03:07 But it varies. This one wasn't much cheaper than a new build, but faster.
03:13 I think the time factor is really critical. It allows us to start generating rental income from the property pretty quickly.
03:21 Repurposing an old building to serve a new function is called "adaptive reuse" and can extend a structure's life.
03:28 Think of turning old factories into artists' lofts or warehouses into ubiquitous street food halls.
03:34 But retrofitting an existing structure is a lot more complicated than planning everything from scratch.
03:39 As developers have found out, apartments and offices aren't always a one-to-one fit.
03:44 It depends on when and where they were built.
03:48 Modern open-plan offices weren't built for living in.
03:52 First, you have to divide up large areas while ensuring rooms get enough sunlight.
03:57 And you can't just have one big bathroom for a whole floor.
04:00 Each room needs ventilation, heating and power, too.
04:05 And for all you know, the old building is full of asbestos.
04:10 I call them the surprises that always pop up with conversion projects and push costs up.
04:17 Though I will say, we were pretty lucky with this project.
04:21 Steven Painter, the adaptive reuse specialist, has even developed an algorithm to measure whether offices are good candidates to be reincarnated as housing.
04:33 So it looks at over a hundred different aspects.
04:36 Some of the key ones are things like the distance between the elevators and the windows.
04:41 You want your one-bedroom apartment to have a nice bedroom with a window and a nice living space with a window.
04:47 And then have maybe the kitchen and the bathroom at the back.
04:51 That's great.
04:53 A lot of office buildings actually have way too much space between the elevators and the glazing to make that happen.
04:59 This means to end up with shiny new apartments, many conversions essentially rebuild everything except existing foundations and facades.
05:07 These constraints make many offices just too much work to convert.
05:11 According to Painter's research, roughly 30% of offices are ideal candidates.
05:16 If you look at the U.S. market where we're doing all of this work, there's about 100 billion square feet of office space.
05:25 And if you convert just the vacancy, about 7% of that, you could create between 6 and 7 million new homes.
05:32 But just turning offices into apartments isn't going to be enough.
05:36 Neighborhoods that are just office blocks can be a bit inhospitable.
05:40 Crawling with finance bros by day, morphing into ghost towns outside of business hours.
05:45 Ensuring people live, not just work there, could change that.
05:49 Like in this district of Frankfurt.
05:51 Once filled just with offices, now it's residential.
05:55 It would have been interesting to be there on a Saturday afternoon.
05:58 You'd be totally alone. All of the infrastructure was unnecessary.
06:02 The tram was still running even though it was empty.
06:05 Frankfurt rezoned the area, turning parking lots into green spaces and kindergartens.
06:11 More apartments and shops are under construction.
06:13 In the end, there will be 6,000 apartments here.
06:18 Now that the area is livelier, offices have actually become more attractive, so it's easier to rent them out.
06:24 The Canadian city of Calgary, which started working with Painter to revitalize its downtown in 2021, is a case in point.
06:34 Calgary had about 38% vacancy in their office market.
06:38 And that was at the time one of the worst in the world.
06:41 They very quickly actually put a program together, which gives you $75 a square foot to convert the building.
06:47 And moved all of the red tape out of the way to make these projects move more quickly.
06:51 The first five projects are now under construction.
06:53 It represents about 750 new homes.
06:57 And they have 10 more approved.
07:00 Much of this housing will be affordable and built with families in mind.
07:05 However, adaptive reuse often has even more red tape than new builds.
07:10 Painter says that'll have to change.
07:16 So if you take Toronto where I am as an example, there's a rule in all of downtown that you cannot remove office space.
07:23 It's protected as employment lands.
07:25 That was created in the 70s and it just never got updated because there was no need to change it.
07:30 Well now there's a desperate need to change it and it's kind of holding up these projects happening.
07:35 Such arbitrary regulations are quite common.
07:38 And approval for conversions often takes as long as it would for a new build, even though the structure's already in place.
07:46 According to recent studies, cities all over the map have lots of office space that they can potentially convert.
07:53 Frankfurt did it with careful city planning.
07:57 And the more that's learned implementing such projects, the greater the savings.
08:01 Many property developers have already expressed an interest.
08:04 Cities like San Francisco and Calgary already support this very promising approach.
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