On the difficulties of converting offices into apartments
Published: Monday, Apr 22nd 2024, 12:20
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In Swiss cities, there is a shortage of apartments and at the same time many empty offices. Why can't the latter be converted into apartments to alleviate the problem somewhat?
However, converting offices into apartments is not as easy as it seems. On the one hand, this can be very expensive, and on the other, the regulations in the cities work against it.
The housing problem is most acute in Switzerland's two largest cities, Zurich and Geneva. In Zurich, the number of vacant apartments is 0.53 percent and in Geneva it is even lower at 0.42 percent. At the same time, 10 or more percent of office space is vacant.
Conversions of offices into apartments are and have already been realized. However, things are not really taking off yet, especially as there is little political support. So what is the problem?
Regulations hinder change of use
On the one hand, there is the tiresome problem of building standards. "Office buildings have different conditions to residential buildings," Isabel Concheiro Guisan told AWP. The professor at the Fribourg School of Engineering and Architecture (HEIA-FR) emphasizes the building depth in office complexes, for example, which often only ensures insufficient light for an apartment. Tenants also want a balcony.
In addition, according to Concheiro Guisan, different earthquake and fire protection standards or those for the insulation of sound or energy also stand in the way of a conversion. According to Guisan, this is all technically feasible. She cited the installation of loggias inside an old office building as an example. Another is new types of apartments, such as those created in a former building of the Federal Administrative Court in Zollikofen, Bern.
How much can it cost?
Technically feasible, but at what price, is the question. Because it is obvious that this is associated with high costs. "The costs for a conversion with structural interventions in an existing building are between 2,500 and 4,000 francs per square meter," said Robert Weinert, an expert at real estate consultants Wüest Partner. Furnishing an apartment with 100 square meters would therefore cost 250,000 to 400,000 francs.
An investor or landlord naturally wants to recoup these costs. "The property developer or landlord will try to write off these investments through the rents," explained Stefan Fahrländer from the Fahrländer Partner consultancy. The location and surroundings of the properties must be correspondingly attractive, which in turn limits the options.
Finally, there are the strict regulations and zoning codes in the cities. Fahrländer points out that many offices are located in industrial and commercial zones where living is not permitted or even prohibited.
This is a further obstacle for potential project developers. "Such projects, which are both technically and economically feasible, are most likely to be considered by long-term investors such as pension funds," said Philippe Salvi, fund manager of Bonhôte-Immobilier SICAV. For them, the return on investment is not so urgent in terms of time. However, he also sees the federal government, the cantons and the municipalities as having a responsibility.
Federal government proposes easing
Various experts have already suggested that the authorities should invest in such projects on the one hand. On the other hand, it is up to them to relax the criteria for conversions where the quality of living is not disturbed by the business.
The federal government has already put such relaxations on the agenda in its action plan to combat the housing shortage presented in February. "The separation of working and living areas, which originally also served to protect against harmful emissions, has lost some of its significance in many places today, as many craft and industrial activities are low-emission," states a document published by the federal government. Bern therefore wants to simplify the procedures for granting building permits and has accordingly encouraged the cantons, cities and municipalities to carry out feasibility studies.
No trend reversal in sight yet
In the meantime, the pressure is growing. In Switzerland, the number of vacant apartments fell for the third year in a row last year, with a double-digit percentage decline. At the same time, the number of apartments being built is lower than it has been for a long time.
The number of permits for new residential buildings fell by 30 percent within eight years between 2016 and 2023. And there are no signs that this trend will disappear quickly, the federal government warned.
In contrast, the proportion of vacant offices is rising steadily and has taken on a structural character since the coronavirus pandemic and the increased spread of working from home. According to a study by UBS, the rise in interest rates has also dealt a further blow to the already ailing office real estate sector.
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