Downtown office building conversionsThe NY Times has an interesting piece on converting downtown office buildings to residential use, with a focus on Dallas (Planetizen abstract). Houston also seems to have a vacancy problem downtown. Why aren't we seeing more of these conversions, especially in non-class-A space?
My guess? I think building owners are counting on $60 oil to create strong office demand in Houston over the next few years, and they're holding out for commercial leases. On the other hand, I think most owners have given up on downtown Dallas, which doesn't seem to be attracting much commercial interest, even with it being the focus of quite a large light rail network. The companies up there are far more focused on the newer suburban town centers in Frisco, Grapevine, Flower Mound, Las Colinas, and others (Las Colinas just got the new Fluor HQ). At David Crossley's Livable Houston meeting last week, we heard a presentation on the Westchase District improvement plan (great vision with realistic implementation), and they mentioned how impressed they were with the suburban business centers they toured in the Metroplex, but they also acknowledged the weakness in downtown Dallas.
The other cities they mention - Ft. Worth, LA, Chicago - also have commercially-weakening downtowns as corporations move to "suburban villages" with big, new, affordable housing and easier commutes. There's even been a lot of debate in New York about whether the ground zero redevelopment should really be more commercial (low demand) or residential (high demand).
I'd love to see more residential development downtown, but not if it's a sign of weakening commercial demand. Hopefully we'll see demand for both be high, and maybe even get some new towers.
(side note: I'm headed to San Antonio and Austin the next couple of days. Probably no posts until Friday.)