Out of Office: A Study on the Cause of Office Vacancy and Transformation as a Means to Cope and Prevent

Office building vacancy is becoming an increasingly visible part of the cityscape. Billboards shout “for rent” and office locations look abandoned even in the middle of the day. Still, new office buildings and locations are being developed, adding up to the built environment. As hardly any office buildings are demolished, adapted or transformed, the vacancy increases. Office buildings are developed though there is no demand for new office buildings. Or…is there? New office buildings seem to be preferred by office users, who leave existing buildings behind, buildings that do not attract new users but remain vacant and become redundant and obsolete. “Throwawayism” is threatening the built environment, representing the unsustainable attitude of all actors involved in the design, construction and use of commercial real estate. This book starts with an inquiry into the cause of long term vacancy, followed by a study of how to cope with vacancy by means of residential transformation. The book is concluded by recommendations for how to prevent or limit long term vacancy in future office developments. This research focuses on Amsterdam, the largest city of the Netherlands, with the largest office market and the highest vacancy rates. The problem of long term vacancy is international though, and cities like London, Chicago, New York, Toronto and Tokyo struggle with it. Causes of structural vacancy Structural vacancy is defined as vacancy of the same space for three years or longer. Of course; the cause of structural vacancy is that there are too much office space within a certain market, city or location. Within a geographically limited market, office users move from one building to another, leaving certain buildings vacant. If these buildings are not rented out again they become structurally vacant. Structural vacancy is a problem for the owners of the buildings as it causes value loss, and is also a societal problem as it causes income loss for the government, depreciation of properties and a downwards spiralling development of whole areas. Studying the preferences of office users, a panel of experts on office user preferences was asked to define a set of building and location characteristics important to office users looking for new office space. Subsequently, the relationship between physical characteristics and structural vacancy of 200 office buildings in Amsterdam was studied. 106 buildings had some level of structural vacancy, showing which characteristics increase the risk of structural vacancy. While former studies found hard factors like accessibility, parking possibilities and flexibility of the building to be the most important success factors for office buildings, this study revealed the importance of soft factors like image and status, visual quality and spatiality. Interestingly, even new buildings were found to be obsolete if the visual and functional qualities are low! Transformation Building transformation is a well known phenomenon; inner city buildings now loose their function and adapt to new use. However, the scale on which office buildings loose their function is unprecedented. Transformation is a sustainable way of coping with structural vacancy, as the buildings lifespan is extended. Case studies of transformed buildings ex post were conducted, pointing out important opportunities and obstacles for transformations, concerning market, location and building factors. With this knowledge, the transformation potential of structurally vacant office buildings in Amsterdam was studied. The possibilities for transformation, focusing on building and location characteristics, were discussed with 30 public and private developing companies. The financial value of office buildings was found to be one of the biggest obstacles for transformations. This value is based on potential tenancy income; thus the valuation method should not be used for structurally vacant buildings. The location of office buildings was a second obstacle. A substantial part of structurally vacant office buildings are located on monofunctional office locations, unsuited for residential transformations unless the location is transformed into a mixed-use location. Office buildings’ characteristics were found to have less effect on the transformation potential, though having a large effect on the transformation building costs. Preventing future vacancy The cause of structural vacancy, quantitatively and qualitatively, and the physical characteristics that increase the odds of structural vacancy were revealed. Based hereupon, recommendations are given for how to develop future office buildings and locations with less risk of structural vacancy. Several studies have shown successful examples of residential office transformations. But why then is transformation not taking place on a larger scale? Based on the study of residential transformation as a means of coping with structural vacancy, recommendations are given for how to develop office buildings in order to increase the residential transformation potential and hence reduce vacancy risk. Target audience Though the office market is quantitatively saturated, high quality office buildings are still demanded. To reduce vacancy risk and increase residential transformation potential, office buildings should be developed in mixed-use locations. Architectural quality – meaning lay-out of floor plans, spatiality of the entrance and quality of the facade – should be focused on! For a sustainable development, governments and private parties need to focus on redevelopment of central urban areas. To increase the buildings transformation potential as well as its functional life span for office use, building components should be removable or transformable. The buildings installations should not be integrated in the buildings structure. As recommendations are given for how to create office buildings with a longer functional, technical and economic lifespan, the book is applicable to the practice of real estate developers and investors, public and private planners, municipalities and architects. As the research topic can be generalised, the book is also of interest to scholars and researchers internationally. The Research establishes a connection between the two worlds of architectural discourse and statistic research. Furthermore, this research is extensive in its description of building and location characteristics, combining qualitative and quantitative research methods and giving new insights in the importance of architecture for the preferences of office users.

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