How Apartments Can Bail Out the Struggling Office Market
Expanding rental options downtown will bring in new residents and help maintain the vitality of central business districts as more employees work from home.
Nashville, Tennessee, has the right idea with new high-rise condos downtown.
Source: Bloomberg
The office market remains in the dumps. Downtown vacancy rates are the highest they've been since 1994. Many central business districts have now had seven straight quarters where more office space was vacated than was leased. In a world of more remote and flex work, office buildings are dealing with both too much supply and not enough demand. That's where the red-hot apartment market comes in.
Building more apartments in urban centers — perhaps even converting some aging office towers into residential units — can help stabilize the office market by removing supply and creating new demand, a necessary pivot now that suburbanites are less likely to be willing to make lengthy commutes.