Sasaki
While there’s wide interest in converting unused office space into housing, developers must overcome logistical and financial hurdles to make those conversions practical. Sasaki’s new tool, Office Shift Pro, streamlines the process. It allows developers and building owners to make investment decisions quickly and with the certainty that they’ve considered every design option—even when adapting complex and older buildings.
As an integrated design firm committed to strengthening America’s urban cores, Sasaki has a front-row seat to the ups and downs of the real estate market. The development market is currently experiencing high loan rates at the same time that construction costs are increasing (Bisnow). The office market is seeing a flight to quality, which means many older office buildings—with building systems approaching the end of their useful life—are having a hard time attracting office tenants, and are experiencing some of the highest levels of office vacancy seen in decades (Boston Globe; NAIOP). These combined factors create difficult conditions for development at a time when housing in particular has been identified as a critical need in most urban areas. This confluence of forces has brought the idea of converting unused office space to housing to mass media.
“Moving a conversion project forward requires solving multiple problems,” says Liz von Goeler, principal interior designer at Sasaki. “To begin with, a developer must identify properties with relatively small floor plates, shallow core-to-window depth, and access to natural light. While light wells and atriums can be installed in properties, they add expense and remove floor area, which in turn affects the project budget and the building’s valuation.” The perfect building for a conversion, she adds, is most likely older, built before electric lighting gained popularity in the 1930’s (New York Times).
"It’s pivotal for developers to be able to quickly and confidently identify properties with the best chance of success for conversion–before their competitors buy them up."
Victor Vizgaitis, principal architect
The other and larger issue to solve is purely financial: balancing the cost of the project with the return on investment. While these conversions are in many ways simple projects, they have a high upfront cost. “City governments are offering developers incentives to help close the gap between the investment and the potential return,” says Victor Vizgaitis, principal architect at Sasaki, “but the fact remains that it’s a challenging and competitive market. Because of this scarcity, it’s pivotal for developers to be able to quickly and confidently identify properties with the best chance of success for conversion—before their competitors buy them up.”
With the office building market beginning to show movement, some of the sales are starting to show a drop in value. While there may not be enough trades yet to consider this a trend, it does demonstrate that potential project financials are in flux. Developers need information at hand to make confident decisions about where to invest so they can act quickly and decisively.
While there are tools that can perform speculative fit-outs of standard residential typologies, these rely on simple rules about how to build new structures and don’t reflect the often complex constraints imposed by older buildings that need to be adapted for different uses. In short, the existing tools are insufficient for the present challenge of adapting existing building stock to new purposes.
Sasaki is attuned to the market’s needs. In response, our in-house software development team, Sasaki Strategies, has delivered Office Shift Pro, a tool that allows developers and building owners to make investment decisions quickly and with the certainty that they’ve considered every design option—even when adapting complex and older buildings.
Office Shift Pro leverages the power of computing alongside designers. Unlike traditional fit-out tools, Office Shift Pro allows designers to set bespoke conditions within a floorplate to represent the unique design constraints of older urban Class B and C office buildings. Using the tool, designers can define different unit typologies such as 1- or 2-bedroom units, studios, etc., each with a minimum and maximum floor area and specific assumptions for rent and conversion costs.
Once unit typologies are defined, Office Shift Pro quickly creates thousands of layout configurations. In less than a minute, the tool can generate a decision tree representing all possible solutions within these parameters.
"Given current market conditions, our goal was to create a tool that would allow developers to rapidly determine how to meet their goals and move projects forward."
Liz von Goeler, principal interior designer
Office Shift Pro’s dynamic dashboard can refine those thousands of potential solutions relative to target unit mixes and market share and compare them to pro forma data. All solutions are compared on a scatter plot showing profit (Y axis) and how well the solution matches the given target mix (X axis). Here the user can browse the chart to find top performers.
And so the client is able to quickly work out the value proposition for a given property conversion and even identify the highest-performing configuration of units. “Given current market conditions, our goal was to create a tool that would allow developers to rapidly determine how to meet their goals and move projects forward,” said von Goeler.
The user can easily test different unit mix targets and see how that changes which solution sets are considered top performers.
Office Shift Pro provides simple worksheets for testing out different rents and conversion costs to see what would be feasible under different scenarios. The user can tweak their financial assumptions and see how the solutions rearrange vertically in the chart.
Office Shift Pro is the latest in a long line of synergistic software tools developed by Sasaki Strategies to meet the unique needs of our clients. For over a decade, the group has designed a wide range of AI, collaboration, and engagement tools that help Sasaki design faster and better by harnessing the power of data.
“I believe that Office Shift Pro will be a game-changer for Sasaki, enhancing our integrated design approach by streamlining workflows, improving collaboration, and empowering our team to deliver even more innovative solutions to our clients,” said Tristan Rock, director of business development at Sasaki. “Ultimately, both developers and building owners can achieve better financial outcomes and maintain a competitive edge in the commercial real estate industry with the help of this platform.”
For more information, contact Tristan Rock.