According to local commercial real estate professionals, a huge topic of discussion right now is the repurposing of the existing office space supply, which may not be resolved anytime soon due to bureaucratic red tape.
As more and more companies allow employees to work entirely remotely, in the office part-time, or some combination of the two, office owners will soon have to convert their buildings to residential or mixed in order to remain profitable, or they will be forced to sell their properties. The problem, they said, is the re-zoning of these properties, which could take a long time as it means possible updates and changes to the Pasadena Central District Plan.
This is not an isolated problem, as many cities across the country and around the world are experiencing similar problems.
“We especially see on the North Lake [Avenue] and in other parts of the city – 25 to 30% or more, ”said local attorney Richard McDonald. “We’re starting to see a kind of systematic shift in how many people can work remotely, which affects rents and vacancy rates. In other words, some businesses return, but they only return, say, three days a week, not five days a week. I don’t really see anyone except maybe the banks saying, “Hey, come back here.”
According to real estate portal Propertyshark, 423 commercial premises are available in Pasadena. The average rent for office space is $ 3.04 per square foot, according to Digsy, a commercial real estate website.
In accordance with New York Times, 14% of office space in downtown New York is vacant – the highest rate since 2009, leading some to consider vacancies to be office pocalypse.
“We estimate that 25-30% of the workforce will be working from home several days a week by the end of 2021, ”said Keith Lister, President of Global Workplace Analytics in a prepared statement.
Last July, after ShipBob decided to allow its employees to work from home, the company built a wall in the center of its Chicago headquarters so that half of the space could be leased to another company, according to CNBC.
“Pasadena has a long history of supporting mixed-use zoning, especially in the Central District where mixed-use has been permitted in most areas such as the Civic Center, Playhouse District and Walnut corridor since 2004,” he said. Urban Planning Director David Reyes.
“When the City Council adopted the last Master Plan in 2015, mixed use was a major component of the vision for the future of Pasadena, with a focus on areas near transit stations, Special Plan areas and key commercial corridors while preserving single-family and small-scale multi-family neighborhoods.
“As we update the Specific Plans to reflect the vision of the Master Plan, mixed-use zoning will be expanded to more areas outside the Central District, where it is currently prohibited,” Reyes said.
Reyes said there was one exception in the Central District. Part of Lake Avenue between Foothill (210) Freeway and Green Street, where the Master Plan prohibits housing in order to preserve the established office used to support corporate tenants and jobs.
“However, due to a combination of factors including the need for more affordable housing, declining demand for commercial offices and the feedback we have received from the community as part of our outreach efforts, staff are considering recommending changes that will allow adaptive reuse of office buildings for to enable housing construction as part of the renewal of the Special Plan for the Central District, ”said Rey.
“Further discussions and additional community input regarding this approach are expected to take place in November at the study session with the Planning Commission,” Reyes said.
According to local realtor Bill Ukropin, building owners will have to lower their rates, find other tenants to expand the space they are not renting out due to the downsizing, or reuse buildings such as residential or hotel rooms but are still there. there will be difficulties and costs associated with the repair.
“They will need to analyze whether you have converted office space into apartments or condominiums, and what the cost will be, for which you can rent or sell them,” Ukrropina said. “And is it better from an economic point of view than lowering the rate to attract office tenants? In addition, parking revenue has dropped significantly because people are not commuting to work every day, but sharing parking passes. ”