Monday, June 17, 2024

Proposal to convert office buildings to address housing shortage in Mexico City

An executive with the Keller Williams real estate company has proposed converting offices into homes to alleviate the housing shortage in Mexico City.

The Valley of Mexico branch of national housing association Canadevi says that 20,000 additional homes need to be built in the capital every year to keep up with demand, but construction figures have been much lower than that in recent years and have declined annually since 2017.

Due to the current shortfall of housing stock, Jorge Carbonell believes that some office buildings – many of which have fewer tenants than they previously had due to the shift to remote work during the pandemic – should be turned into apartment blocks.

“There is a decline in construction and real estate development and converting some offices into homes could be an option,” he told the newspaper Reforma. “It’s a great option to alleviate the crisis” given that there is so much office space in Mexico City, Carbonell added.

According to real estate company JLL, there are 7.5 million square meters of office space in the capital and just under 1.76 million meters – 23.5% of the total – were unoccupied at the end of June.

“Within what is the new reality [created by the pandemic], office spaces are the most affected division of the real estate business,” Carbonell said.

But offices converted into furnished homes could be “very profitable” for their owners if they rented them to vacationers or people in Mexico City for business, he said, citing annual returns of 8-12% of the initial investment.

“… Today it’s easier to remodel than to build a [new] building, the permits in the city are very complicated. The transformation of [office] buildings … to homes could be a great option,” the real estate executive said.

“There is a substantial increase in the cost of construction materials so working with something that is already built becomes very interesting … [and] the authorities look favorably upon it.”

Carbonnel also said that his idea could increase housing stock in central areas of the capital whereas a lot of construction occurs on the outskirts. Office buildings that are good candidates for conversion to apartment blocks are in central locations, up to 50 years old and have vacancy rates of 50% or more, he said.

With reports from Reforma 

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