--- title: The answer to sky-high housing prices may also be sky-high - The Hustle description: Turning “zombie” office buildings into residential towers could help correct a brutal market. image: https://hs-sbup.thehustle.co/hubfs/The%20Hustle%20News/Assets/Images/952662398-httpsthdaily.s3.us-west-1.amazonaws.comfinal_size-zombies_20230808231951.webp --- # The answer to sky-high housing prices may also be sky-high ![Ben Berkley](https://53.fs1.hubspotusercontent-na1.net/hubfs/53/assets/hubspot.com/web-team/WBZ/HubSpot%20Media/Blog%202021/Images/Nav/Optimized/TheHustle_Icon_Dark.svg) [Ben Berkley](https://hs-sbup.thehustle.co/author/ben-berkley) Published: August 10, 2023 Updated: October 11, 2023 Sure, NYC’s Empire State Building makes a fine list-topper as [America’s favorite piece of architecture](https://info.cmog.org/sites/info.cmog.org/files/pdf/150buildings.pdf). ![apartment graphic](https://hs-sbup.thehustle.co/hs-fs/hubfs/The%20Hustle%20News/Assets/Images/952662398-httpsthdaily.s3.us-west-1.amazonaws.comfinal_size-zombies_20230808231951.webp?width=595&height=400&name=952662398-httpsthdaily.s3.us-west-1.amazonaws.comfinal_size-zombies_20230808231951.webp) But it ain’t my favorite — that’d be LA’s 2121 Avenue of the Stars, a gleaming 34-story beauty that holds two secrets: - Its unofficial, fictional name, Nakatomi Plaza (AKA the setting of *Die Hard*). - It’s actually pretty empty — it has [186.9k](https://www.irvinecompanyoffice.com/locations/los-angeles/west-los-angeles/2121-avenue-of-the-stars.html?utm_source=google&utm_medium=cpc&utm_campaign=la_western-asset-plaza_all_property-brand&gad=1&gclid=Cj0KCQjwz8emBhDrARIsANNJjS5IR9LeKzraQpSVzEzDuDUC-ztAboCaF72WSID1MrDyEGHZ709xIw0aArNYEALw_wcB) square feet currently for lease. It isn’t alone on the latter one. In the 10 largest US markets, ~50% of office space sat unoccupied in June, [per](https://www.investopedia.com/commercial-office-vacancy-rates-don-t-tell-whole-story-7507372) *Investopedia*. We’re in the thick of a commercial real estate crisis — one in desperate need of a hero. #### **John McClane = housing conversions?** A new paper from the National Bureau of Economic Research (NBER) lays the groundwork for shifting America’s underutilized office space into much-needed housing supply, [per](https://www.businessinsider.com/zombie-office-building-new-apartments-housing-costs-in-us-cities-2023-8) *Insider*: - The NBER team found that ~11% of office towers in the 105 most-populous US cities could be converted into residential properties. - The report outlines 2k+ “zombie” office buildings — empty and unrentable — that could be turned into eco-friendly 200-unit apartment towers. The best-case scenario would add 400k homes to the market, making a dent in the [millions of units](https://www.cnn.com/2023/03/08/homes/housing-shortage/index.html) needed to steady the housing crisis. #### **Could it really work?** … Yeah, seems like it. Bringing these zombies back to life could make financial sense: - It can be cheaper and quicker to retrofit existing structures than to start from scratch, anyway, but 2022’s Inflation Reduction Act also incentivizes green building — if the new homes meet efficiency standards, they could qualify for $10B+ in federal grants. - The opportunity is particularly massive in NYC, SF, and LA, which have the most towers fitting NBER’s residential conversion criteria — and an insatiable demand for more housing. The first step: real estate leaders fully accepting that the combo of remote work and high interest rates mean commercial tenants (like, say, the Nakatomi Corp.) aren’t coming back anytime soon. Topics: [Housing And Real Estate](https://hs-sbup.thehustle.co/tag/housing-and-real-estate) ## Follow us on social media prev next - ![Why tech workers are sleeping in expensive boxes](https://hs-sbup.thehustle.co/hubfs/The%20Hustle%20News/Assets/Images/1611893784-httpsthdaily.s3.us-west-1.amazonaws.comfinal_size-brownstone-pods_20231002232126.webp) ### Why tech workers are sleeping in expensive boxes - ![Apartments are getting built at a record clip — it’s too bad they aren’t the right kind](https://hs-sbup.thehustle.co/hubfs/The%20Hustle%20News/Assets/Images/503692535-httpsthdaily.s3.us-west-1.amazonaws.comfinal_size-Apt-Construction_20230910231429.webp) ### Apartments are getting built at a record clip — it’s too bad they aren’t the right kind - ![Will the Bay Area get a new city?](https://hs-sbup.thehustle.co/hubfs/The%20Hustle%20News/Assets/Images/1030627733-httpsthdaily.s3.us-west-1.amazonaws.comfinal_size-houses_20230827234703.webp) ### Will the Bay Area get a new city? - ![Looking for an edge in attracting talent? 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