Houston's skyline is set for a makeover, with a push to transform dated office buildings into residential and mixed-use properties amid a flagging office market. According to recent data by real estate data company CoStar, a ghostly array of some 300 entirely vacant office buildings is causing more than a headache for property owners; it's also denting the pocketbooks of investors and gnawing at the city's tax revenues. The response? Turn these empty giants into homes for Houston's growing crowd.
But experts are quick to tamp down any towering expectations. While The Houston Chronicle reports that incentives are being considered to encourage developers to take on these projects, the reality is sobering. "At the end of the day, conversions can help in very tiny projects, but generally, that is not a needle-mover," Steve Triolet, senior vice president at Houston-based real estate company Partners, told the publication. The firm's analysis suggests a mere 33 buildings are viable candidates for residential conversion—a far cry from the existing surplus.
Despite such challenges, Houston isn't backing down from the conversion crusade. As per a report by The Real Deal, the Bayou City ranks fourth in the nation for office conversions, with roughly 5 million square feet geared up for a new lease on life – that's a staggering 316% surge in comparison to previous years. The conversions weave a future of multi-use spaces and homes within Houston's expanding population, particularly in high-profile areas like the Galleria and downtown.
CBRE's executive vice president, John Spafford, sees the city's empty offices and growing demographic as an advantageous blend. "The availability of older, noncompetitive office buildings and continued population growth make Houston a prime candidate for conversions to multifamily and other uses," he stated. Houstonians can look forward to an urban redevelopment that spotlights the city's malleability—an approach that may set a blueprint for other metropolises tackling the surplus office space conundrum.
Meanwhile, building owners might be facing a tough call. With a chunky $1.1 billion in office loans maturing this year in Houston, according to CoStar, and a notable shift as businesses fancy newer or refurbished digs over old-school offices, there's little room for error. As Houston's office comeback stalls, a mix of conversions and reinventions seems to be the chosen path forward out of the office space quagmire engulfing Texas' largest city.
