Working Paper: CEPR ID: DP18396
Authors: Arpit Gupta; Candy Martinez; Stijn Van Nieuwerburgh
Abstract: The conversion of brown office buildings to green apartments can contribute towards a solution to three pressing issues: oversupply of office in a hybrid-and-remote-work world, shortage of housing, and excessive greenhouse gas emissions. We propose a set of criteria toidentify commercial office properties that are are physically suitable for conversion, yielding about 11% of all office buildings across the U.S. We present a pro-forma real estate model that identifies parameters under which these conversions are financially viable. We highlight several policy levers available to federal, state, and local governments that could accelerate the conversion, and that may be necessary should policymakers desire the creation of affordablehousing. We highlight the role that the Inflation reduction Act could play.
Keywords: clean energy; technology
JEL Codes: G1; Q51; Q54; Q58; R21; R23; R32; R38
Edges that are evidenced by causal inference methods are in orange, and the rest are in light blue.
| Cause | Effect |
|---|---|
| Conversion of brown office buildings to green apartments (R31) | Addressing oversupply of office space, housing shortages, and excessive greenhouse gas emissions (R31) |
| Financial viability of conversions (G32) | Market conditions (fair market values of office buildings) (R33) |
| Policy interventions (Inflation Reduction Act) (E31) | Increased conversion rates (O47) |
| Rehabilitation of existing buildings (L74) | Reduced carbon emissions (Q54) |
| Financial distress of conventional office buildings (R33) | Opportunity for conversion to green apartments (R31) |