Chip off the old blocks: would Australia’s empty office towers be better off as housing?

“It’s crazy to leave existing infrastructure empty when we have people sleeping in the streets,” says Robert Pradolin, founder and executive director of Housing All Australians. As office blocks stand half empty in the wake of the Covid-19 pandemic, at the same time as a severe shortage in affordable housing makes headlines, it is tempting to think the former issue might be a solution to the latter.

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Converting empty offices into apartments is back on the agenda, with New South Wales chief economist Stephen Walters suggesting it could be a solution to revitalising a floundering city centre. There are murmurs from developers in other cities too.

However, leading design industry practitioners say the only Australian office buildings viable for conversion to residential flats were built before the 1980s.

Pradolin’s organisation has been using vacant buildings awaiting development approval as “pop up” housing shelters, but he concedes that “if it’s an existing office building that’s B- or C-grade, the highest and best use is still probably [an] office building”.

‘It’s really only prestige apartments doing well’

Several office block conversions took place in the CBDs of Melbourne and Sydney following the recessions in the early 1980s and 90s. This style of redevelopment is again being considered, but buildings deemed most suitable are generally in premium locations and priced accordingly.

Tim Cassidy, a director at the real estate firm Cushman Wakefield in Sydney, believes low-occupancy commercial buildings in need of substantial refurbishments may well be targeted by developers eyeing the prestige market. But he says: “It’s really only prestige apartments doing well.”

Candalepas Associates, with Wendy Lewin, recently repurposed the 1970s-built TNT Towers at Redfern in Sydney into 181 apartments for the developer Deicorp. Apartment prices started at $695,000 for a studio, and stage one has sold out. BVN’s reimagining of the heritage-listed 1960s former Water Board building – on Bathurst Street in central Sydney – is another recent example.

As Pradolin explains, to convert an office block “into affordable housing, the land owner will suffer a loss”. Because these developments are not profitable, they are unlikely to take place without government intervention.

‘Bedrooms need windows, as do living rooms’

Architect Angelo Candalepas says most commercial buildings constructed in the past 50 years do not work for long-term repurposing, with ceiling height, available light and natural ventilation the main impediments. Meanwhile, the Property Council estimates it could cost 20-30% more to retrofit office buildings than it would to demolish and purpose-build apartments.

“We in the world of architecture – or really development – produce a lot of buildings that are shrink-wrapped into their use in such a tight manner that none of them can be converted later,” Candalepas says. Older buildings, even from as recently as the 1960s and 70s, “were created with a sense of a broader future”. The best of these face north, receiving good sun, with columns spaced conveniently for apartment layouts.

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Creating a liveable apartment out of an office block hinges on the depth of the building floor plate – the distance between lifts and windows.

In most modern office towers the floor plates are typically too large. “You can’t have it too deep and rooms too far in, because bedrooms need windows, as do living rooms,” says architect David Stevenson of Lacoste + Stevenson, pointing to the way apartment layouts often address the space between facade and entry point. “We’ve all seen the living/dining/kitchen progression, to get from the facade back to the entry and lift.”

‘You were part of the fabric of the city’

The Property Council of Australia classifies office buildings according to grade and location – in line with perceptions of quality held by occupants and investors. A-premium or A-grade building may be brand new or newly refurbished, with solid green credentials and a prime location; B-grade buildings are well-maintained with adequate facilities and accessibility; and C-Grade buildings are generally older and less accessible.

Stephen Turner, managing partner at Gray Puksand, whose firm converted Canberra’s Department of Social Services Buildings at Greenway to a senior living development pre-Covid, says that “C-grade assets are a good starting point” if they can be transformed to genuinely meet market demand and the needs of society.

Office block conversions are unlikely to be cheaper than new developments, but Turner says there can be other advantages. “Adaptive reuse can retain the embodied energy of existing assets – and remove the assumption that new builds are the only option.”

When an office block is converted with sensitivity, it can also be a pleasure to live in. When Jayne and Mark Ferguson and their three teenage sons moved into the Residence – a residential apartment tower on the eastern side of Sydney’s Hyde Park – keen for a city living experience between family homes, they found it “soundproof and very private” thanks to “the tower’s solid construction”.

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The building was constructed in 2008, transforming a 1970s concrete office block that once housed the NSW police headquarters into a prestige address. The design, by Scott Carver Architects, reimagined the tower as two slender wings to access light and views, taking in St Mary’s Cathedral, the Opera House and the Heads.

“It was like living in a hotel,” Jayne says. “The boys would have their friends around to use the pool and I would jog and walk the dog to Mrs Macquarie’s Chair. Mark and I both walked to work.”

Management consultant Eric Fleming intended to stay in Highgate, an office-turned-residential building overlooking the Sydney Harbour Bridge, for only a few months.

His rental ended up stretching into an ownership, and he remained in the building for 15 years. The former Esso office tower conversion in 1996 was a great success, sweetened by amenities including a swimming pool and gym.

Fleming recalls a few structural columns within the lower (former office) floor layouts, but he ended up purchasing an apartment on a newly added floor that was column-free. He and his wife moved out only four years ago when their second daughter arrived.

“We loved it and we really missed it when we left,” Fleming says. “I loved just sitting and looking at the view. And walking into the city for dinner … you were part of the fabric of the city and that was really nice.”

‘Cities always go through cycles’

Property council data suggests CBD office occupancy rates around Australia are between 35% (Melbourne) and 84% (Darwin), with Sydney at 50%. Higher numbers of residents make for more vibrant city centres, but whether that means there’s a market for another round of building conversions is debatable.

For starters, Australians are steadily returning to the office, with Melbourne recording an 11% increase in office occupancy between the end of February and the end of March.

Rob Backhouse, principal at global architecture and workplace specialist Hassell, suspects talking up office conversions – where larger building cores and structural columns can mean compromised living spaces – is hasty.

“Perhaps I’m being optimistic but I think the office and our cities are underpinned by humans being social animals and wanting to be together when we work and play,” he says. “However, I do think the post-pandemic world will see a reduction in the office footprint of organisations.”

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Backhouse says workplace design and amenity will adapt to become “more diverse and magnetic”. He points to the success of Melbourne’s postcode 3000 initiative in the early 90s, when a previously dead CBD was revived by new residential opportunities combined with a liquor licensing review that brought the streets and laneways to life.

“Cities always go through cycles but I think our cities will get better and more diverse as we move through this,” Backhouse says. “More experimental smaller entities will be able to afford to come back in and fill the C- and D-grade space that isn’t justified for demolition.”

In the meantime, Pradolin will continue to make use of available space. “The way Housing All Australians is approaching it is: while it’s sitting there empty, let’s use it as short-term shelter, while we’re advocating and building the 400,000 additional homes we need in the non-market sector of the housing continuum.”