Even before the pandemic emptied office buildings from the Twin Cities to Duluth, there was a shift underway as more and more businesses offered employees the opportunity to work from home. The rise of the tech industry was helping to redefine the American workplace – although it should be noted that these shifts in work culture and location affected some sectors much more than it did others.
Regardless, the trend away from strictly in-person office requirements was accelerated by the pandemic. Office spaces hurriedly emptied in the early part of the pandemic, many for good.
Vacancies on the rise
Last year, office vacancy rates across every sector and region rose from 9 percent to 16.4 percent, according to Statista Research Department data. “Working from home has become the new normal for many employees in the United States,” Statista states.
According to American City & County, a publication for government professionals, that vacancy rate is expected to remain in place.
The magazine states that “that could pose a problem for cities and counties.” The work-at-home trend will have fiscal implications for local governments that are dependent on commercial property tax revenues for much of what they do.
Softening the impact
American City & County says one possible way to soften the blows for governments and owners of mostly empty office buildings is to “convert empty and obsolete offices into residential housing units.”
The repurposing of office spaces would grow the pool of housing, especially important in areas with a tight residential real estate market. The conversions might also expand affordable housing opportunities.
A Brookings Institute report office-to-housing conversions “will all but certainly shorten commutes, and/or increase the viability of transit, walking and bicycling.”
A push in Congress
A bill introduced in Congress in late July is seen as a push in that direction with its call for creation of a federal tax credit to support the repurposing of excess office spaces into residential, commercial or mixed-use properties with a requirement to include affordable housing units.
Michigan Sen. Debbie Stabenow said the Revitalizing Downtowns Act will “support the economic growth of our cities, help small businesses and provide people affordable places to live.”
The conversions would also revive revenues for local governments and owners of the properties.
It will be interesting to see if the measure gains support from Minnesota commercial property owners or government officials.