Aerial view of Denver skyline and State Capitol Dome. | Joe Sohm/Visions of America/Universal Images Group via Getty Images
Since the pandemic, cities across the country have faced a frustrating contradiction. On one hand, housing costs have soared, worsening homelessness and pushing residents to the edges of metropolitan areas. On the other hand, the rise of remote work has left once-thriving downtown office buildings standing eerily empty, with the national office vacancy rate set to reach nearly 20 percent by this year’s end, according to commercial real estate firm CBRE.
The US is estimated to be short nearly 4 million to more than 7 million homes, fueling an affordability crisis that both Kamala Harris and Donald Trump have talked about on the campaign trail. The median national rent hit $1,411 this summer, marking a 22 percent increase since January 2020. More than half of tenants are now cost-burdened, meaning they spend over 30 percent of their income on rent — a record high.
At first glance, repurposing these vacant office buildings in downtown areas — close to public transit and local retail shops struggling with reduced foot traffic — seems like a perfect solution.
Yet, despite the intuitive appeal of converting offices to apartments, cities have found these “adaptive reuse” projects to be far more difficult and costly than expected. Strict zoning laws, high interest rates, rising construction costs, and the need for significant updates to plumbing and electrical systems have made it nearly impossible for most developers to make these conversions financially viable.
But new research out Tuesday from the Pew Charitable Trusts and Gensler, a global architecture firm, lays out a fundamentally different approach for turning offices into apartments.
Their plan centers on converting offices into co-living, dorm-style units, featuring private “micro-apartments” around the perimeter of each floor, with shared kitchens, bathrooms, laundry, and living spaces in the center. This model would not only reduce construction costs by 25 to 35 percent compared to traditional office conversions, but it would also offer rents affordable to people earning well below the area’s median income, and not require hefty security deposits, lowering barriers to entry even further.
Not all cities are ideal for this co-living model, but the report identifies Denver, Seattle, and Minneapolis as three prime candidates, with dozens of existing buildings in each that could make this housing model work right now. These cities share several characteristics: high median rents, elevated rates of homelessness, high downtown office vacancy rates, and, crucially, minimal barriers to construction. A second report on Los Angeles and Houston is forthcoming, and researchers note that more places, including Washington, DC, or New York City, could become viable candidates if they amend their zoning codes, particularly around parking requirements and rules over whether windows have to open or not.
The researchers sketch out three similar but distinct models that conform to the rules and constraints of each city. In Denver, for example, they outline a co-living model that costs renters between $500 and $1,000 per month — a significantly lower price than the city’s median rent of $1,771 and still a profit for developers. These smaller apartments, ranging from 122 to 208 square feet, would come pre-furnished with a twin bed, desk, chair, nightstand, microwave, and a mini-fridge. By contrast, traditional studios in the city average around 440 square feet and include a full kitchen and private bathroom.
Each floor in the proposed Denver repurposed office building would feature four shared kitchens, two living rooms, one laundry room, a central storage area, and communal bathrooms, along with four single-occupant bathrooms for added privacy. Every building would also have a gym for residents on the second floor, and offer leases for shorter periods than 12 months.
Even just a few years ago, none of these cities would have been able to make the math work on such “co-living products,” said Alex Horowitz, the project director of Pew’s housing policy initiative. But the economics of office buildings are changing, and local governments are passing new laws to help facilitate the construction.
In 2023, for example, Denver authorized a new adaptive reuse pilot that streamlined permitting and eased regulatory barriers. This past spring in Washington state, lawmakers passed a law legalizing co-housing, suddenly making Seattle a strong candidate for the model. Minneapolis’s zoning rules, revised in late 2018, also paved the way for co-housing, which had previously been prohibited in the city.
Offering market-rate housing at lower rents in desirable, opportunity-rich areas could be transformative for cities and their residents. The co-living model could not only help address and prevent homelessness, but also could provide new affordable housing options for a diverse range of people, including students, young professionals, service industry workers, retirees, and urban newcomers.
Nonprofit and for-profit stakeholders in Denver, Seattle, and Minneapolis are currently “organizing themselves” and vetting properties, according to Wes LeBlanc, the strategy director at Gensler. It will ultimately be up to city leaders and governors to run with these ideas.
“But the upside seems frankly enormous so I anticipate that this will happen,” Horowitz told me. “There are no obvious regulatory barriers in any of those three cities.”
Single-room occupancies (SROs) were plentiful in cities before they became illegalAt the turn of the 20th century, as US cities rapidly expanded, immigrants, day laborers, and factory workers gravitated toward downtown urban areas, often finding temporary, cheap housing. Small, inexpensive rooms could easily be rented for a day, a week, or longer. Some individuals “boarded” in private homes, while others stayed in ultra-cheap hotels called flophouses. These flexible and communal housing arrangements became widely known as single-room occupancies (SROs).
After World War II, as middle-class white families left cities for spacious new suburban homes, SROs were increasingly stigmatized, viewed as shoddy housing for the poor and deviant. By the 1950s, cities like New York began passing laws to ban SRO construction and to prevent the conversion of existing homes into smaller units. By the 1970s, SROs were regularly vilified in the media, despite still serving as crucial housing for hundreds of thousands of people, including those with mental illness who were booted from the deinstitutionalization of asylums.
Over time, cities incentivized landlords to convert their existing SROs into luxury apartments, resulting in the destruction of 1 million affordable units between the mid-1970s and 1990s.
The idea that cities may have erred in banning these lower-cost housing options has been percolating in urbanist discussions for more than a decade, especially as the homelessness crisis has worsened. The Furman Center at NYU argued in a 2018 report that reintroducing SROs could help address the affordable housing shortage.
There was a misunderstanding that “a housing type that met the needs of a lot of people on society’s margins was responsible for a set of problems that existed on those same margins,” wrote the architecture critic Karrie Jacobs in 2021. “The notion took hold that if you eliminated the housing, the marginal people would simply vanish.”
Even as SROs continue to carry stigma, co-living arrangements are not uncommon, especially in densely populated Asian countries. Startups catering to affluent young US professionals also began to emerge in the late 2010s, offering co-living options for those who sought the social benefits of roommates with modern tech amenities. One such company, Starcity, earned New York Times attention in 2018 for bringing “dorm living for professionals” to San Francisco. Starcity ultimately filed for bankruptcy in 2021, as did another more up-scale co-living company, Common, this past summer.
The SRO model could move the needle on homelessnessSo why would the Gensler/Pew model succeed when these other co-living startups failed? The biggest difference, by far, is the proposed rent levels. The Pew/Gensler model aims to target renters who earn far below median income, a far larger and more diverse group than just affluent young professionals.
The Pew/Gensler SRO model also optimizes for privacy more than the co-living startup alternatives did. “Those other models were more akin to renting a bedroom in a two-or-three bedroom apartment with other roommates, while this is quite literally like a [studio] apartment-style, where the units don’t open up into a common area, they have their own hallways and corridors, and more separation,” explained Gensler’s LeBlanc.
The economics of office conversions have also changed considerably compared to five years ago, when the prices for office buildings were much greater. And with politicians under immense pressure to solve their spiraling housing crises, cities and states are also passing new incentives for adaptive reuse.
“Washington state legalized microunits this past session, Oregon did it the year before, Hawaii did it for adaptive reuse this session, and even this year in Colorado they ended local restrictions on how many people could live together,” said Pew’s Horowitz. “I think there is a real trend of allowing housing like this.”
One defining feature is that existing housing subsidies have the potential to stretch much further with this co-living model. In Seattle, according to the report, the co-living model could be developed at roughly $190,000 per unit, which is well below the price of developing a traditional studio apartment at $400,000 or more. In Denver, the model could be produced at roughly $123,300 per unit, the researchers estimate. In total, Pew and Gensler project that Minneapolis and Seattle could construct four times as many affordable housing units with this model, and Denver could get a staggering 13 times as many.
Some low-income housing advocates may object to using public subsidy to construct smaller, bare-bones options. When the New York Times featured Starcity dorms in 2018, many readers mocked the proposal online, describing it as “depressing” and insulting. In more recent years, as cities have turned to “tiny houses” as homeless shelter alternatives for people sleeping outside, some critics have raised concerns that the tiny shelter model is degrading, especially those that are located in remote parts of town.
Pew and Gensler believe the devil is in the details, and stress that what they’re proposing comes with many amenities, as well as prime central locations. More than three-quarters of people experiencing homelessness are unhoused for less than a year, so building affordable housing for those facing rent hikes or emergencies could help significantly reduce new cases of homelessness.
“It sounds like a good idea generally speaking,” said Dan Emmanuel, the research manager at the National Low Income Housing Coalition, though he added that he doesn’t see this solution as obviating the need for a rental assistance entitlement.
Embracing an affordable, dorm-style living option will require Americans to accept that people may very well desire different kinds of housing at different stages of their lives. That may not be as hard to do as it once was. In 2023, Pew released a nationally representative survey finding that large majorities of Americans back policies that would allow for more and different types of housing, including 81 percent who support office-to-residential conversions.
A return to single-room occupancies doesn’t mean an inevitable return to unsafe, unsanitary housing, either. Banning decent versions of this model, advocates say, is actually what fuels illicit and dangerous options. The Pew/Gensler model would come with more costs baked in for security and maintenance, something LeBlanc said can help remedy SRO problems from earlier decades.
“Our communities won’t become diverse without a diverse housing stock,” as urban writer Alex Baca put it a few years back. Making cities more affordable is an essential first step.
vox.com