In cities across the United States, iconic but aging office buildings are being converted into mixed-use residential buildings, reflective of how our downtowns are changing.
Here in Dallas where I live, the 50-story-building Thanksgiving Tower, the second tallest building when it was built in 1982, is undergoing that mixed-use, residential transformation.
Earlier this month, Dallas-based Wood Capital, in a partnership with Mintwood Real Estate and Adolfson & Peterson Construction (AP), announced converting the 1.4 million square foot office tower into a mixed-use residential building including 229 multifamily units.
“Adaptive reuse is a thrilling trend in today’s real estate industry. This is an exciting development for the Dallas Central Business District, which is ripe for office-to-residential conversions,” AP's Will Pender said in a press release.
“By converting vacant office space into luxury, multifamily housing, we can create a more vibrant, mixed-use neighborhood and meet the growing demand caused by migration to the area,” said Jonas Woods, Woods Capital CEO.
Overall, the vacancy rate in Dallas' downtown was 28.7 percent, with nearly 500,000 square feet available for sublease.
To some pundits, this would indicate that Dallas and America’s downtowns are in big trouble, largely because of the lingering effects of Covid-19 and the rise of remote and hybrid work.
In 10 of the largest US cities, office occupancy averages are less than half, roughly 44 percent as of mid-August, of what they were back in 2020 before the pandemic hit.
Stanford University’s Nicholas Bloom predicts that 20 percent of all workdays will be done remotely, up from roughly 5 percent before the pandemic, with as many as half of the knowledge and professional workers who occupy downtown offices working remotely at least part of the time.
This poses the question: Can our iconic downtowns survive this shift?
The answer is yes. Even if the office were to go away completely, which will hardly be the case, downtowns will endure simply because they are one of the most adaptive and resilient of human creations.
The truth is that central city neighborhoods have been throughout their histories continually changing. They have been built and rebuilt following great fires, floods, earthquakes, epidemics, wars and terrorist attacks.
If anything, what Covid-19 has really done is simply accelerate changes in downtowns that were already happening.
Many people, especially younger ones, still want to live in and around downtown, even if they spend less time in their offices. They may, at some point, move to more-affordable suburbs or to less-expensive parts of the country to start a family, but for now, they seek the economic and social opportunities that downtowns can offer.
In big metros and small, downtowns occupy the most central locations and have the highest concentrations of spaces where people can come together. Even where offices remain relatively empty, downtowns are abuzz with activity, which is precisely what people value.
In a 2021 Gensler City Pulse survey, restaurants, cafes, and social venues topped the list of what city dwellers say are the most important features of a downtown, followed by parks and open spaces, access to transit, shopping, theaters, museums and other cultural attractions. Office buildings brought up the rear of the ranking.
Gensler, a global architecture firm, is re-imagining the role of downtown to include open spaces, including all-season outdoor spaces, as essential to the future of collaboration. Designers at the firm advocate spaces for community use such as tool libraries, classrooms, and co-working spaces on the ground floors rather than just the standard retail shops that may stand empty at night and on weekends.
“Downtowns were already becoming less singularly work-focused and more mixed-use before the crisis,” says Richard Florida, professor of economic analysis and policy at the University of Toronto’s Rotman School of Management and author of The Rise of the Creative Class and The New Urban Crisis.
Florida says the term “central business district” no longer applies. Today’s downtowns are more aptly considered as central connectivity districts — essential platforms where people socialize, cooperate, and collaborate.