COVID has created an unexpected crisis facing the commercial real estate market. Worker flight to the relative safety of the home office has hollowed out the insides of shiny great high rises in cities everywhere. Post-COVID, workers are not flocking back in sufficient numbers to roost in the high rise heaven of central business districts.
As a result, commercial landlords are suffering greatly. And so, potentially, are the banks that have loaned to those landlords. The failure of numbers of these banks might trigger serious trouble for the entire economy of a nation.
The unthinkable? Plugging truly affordable housing into the commercial housing breech! Lord knows, homelessness increases everywhere. More homes are desperately needed. But cities, states and countries drag their heels universally, horrified by the expense, even in the clear light of well-documented affordable housing need.
Could commercial building repurposing actually work to provide affordable housing? How might commercial buildings provoke a developer to consider adapting real estate built for some commercial purpose into something approaching the aspirations of the United Nations’ Right to adequate housing.
An article published a year ago explains how developers use a ‘pencil notion’ to evaluate the economic cost/benefit of adapting a commercial building to another purpose. As a spoiler alert, applying this pencil to California commercial buildings, it seems that hotels and motels may indeed prove to be suitable projects for conversion. But repurposing the high rise office towers in the Central Business District did not (a least not in California, last year). Read more at The RAND Blog: How Can Commercial Buildings Become Needed Housing?
In order to understand what many modern commercial buildings may be notionally see as inadequate for conversion to housing, try the following post. It explains that the high rise buildings with vast interiors fail to provide ‘acceptable’ access to natural light, making them unsuitable for residential conversion. Older commercial buildings, which made less use of artificial light, revel in their ‘old-fashioned’ construction that took care to provide suitable views of the out-doors even to downtown office workers. Try Empty Office Buildings: High-Rise Caves For People Who Are Homeless?
And so we seem faced with massive amounts of business space in high rises that might easily be divided, but only by turning the central interior of former offices floors into ‘caves,’ which can only be artificially lit.
Except . . . wait a minute here! Anyone following the news worldwide is aware of a trend that we featured in a post 5 years ago as frivolous joke, but which sounded a warning. Try Is An April Fool’s Joke A Warning Of Micro-House Reality?
Yesterday’s warning has become today’s ho-hum reality. A quick Google search for ‘tiny homes for homeless’ yields 20 North American stories about tiny home villages built or under construction to provide ‘temporary’ or ‘transitional’ housing. Ominously, with jurisdictions everywhere faced with inadequate supplies of ‘real’ affordable housing, we are seeing more stories where these tiny home villages are described not only as transitional, but effectively ‘permanent.’
If a shoebox/home qualifies, then standards for ‘adequate’ housing would seem to be pragmatically flexible. All of which brings as back to our headline. If banking systems, which are the beating heart of capitalism worldwide, are facing economy-threatening meltdowns over vacant business space, might they not find a way to provide the cash, impetus and hopefully ingenuity to inadvertently help solve a worldwide housing crisis?
