Office‑to‑Residential

Three things changed at once. Office vacancy in major metros sat near historic highs through 2024-2025 — ULI’s 2024 *Behind the Façade* report on office-to-residential conversions found that economic feasibility had improved as office asset values reset and incentives expanded. Texas SB 840 and SB 2477 layered ~45% tax credits onto adaptive reuse and conversion work in Texas. And the national adaptive reuse market sits at roughly $94.6B with a ~15% CAGR. The category is not a trend. It is a structural shift in how cities reuse downtown stock. (Sources: ULI 2024; Texas legislative record; market research compiled in ANDRES strategy session 2026-03-13.)

Floor plate depth and window-to-core ratio. The deepest office floor plates — Class A trophy with central core and 50-foot lease depth — are the hardest to convert, because residential units need light and air and a corridor structure that does not exist in open office. The buildings that convert well tend to have narrower plates, more vertical circulation, and structural systems that allow new plumbing risers to be added. Carlos’s adaptive reuse experience at ANDRES — from Mosaic in 2007 onward — pattern-matches: the conversions that work are the ones where the structural geometry cooperates.

Plumbing, light, and code. Residential requires bathrooms and kitchens stacked vertically; office plumbing typically serves a few core stacks. Adding distributed residential plumbing means new chases, new risers, and new structural penetrations through floor plates that were not designed for them. Residential also requires natural light to every bedroom — which means windows, which means demising walls that align with window mullions, which means the unit plan is dictated by an exterior grid you did not design. Code compliance — egress, fire separation, accessibility — completes the puzzle.

The same way we price adaptive reuse: known and unknown, with contingency scoped for the unknown and staffing scoped to absorb it. Office conversions share the column tolerance problem Carlos described on Cabana — columns offset, twisted, or off-level cascade through the entire dimensional string and every unit gets built around columns you cannot move. We price the visible work and we staff to react to the rest. That is not a sales line; it is the only honest model when you cannot see behind the slab.

The honest range depends on building age, system condition, and how much abatement is required, but conversions tend to compress the schedule a developer would expect from new ground-up construction — there is no foundation, no shell. The catch is that the saved time can be eaten by discovered conditions. On Cabana, partial demo and abatement had been done before ANDRES started, and the rebar nightmare on the pool deck still became the largest schedule driver. The right preconstruction discovery process is the largest single lever on conversion schedule risk.

The state-level levers as of 2026: Texas SB 840 and SB 2477 layered ~45% tax credits onto adaptive reuse and conversion projects, on top of federal Historic Tax Credits where the building qualifies. Local TIF (Tax Increment Financing) districts in dense downtowns can reinvest tax surplus to incentivize bringing abandoned or underused buildings online — Carlos has explained the math: an empty building drives down district value, a completed and occupied one starts producing tax revenue again. The right capital stack often layers TIF, HTC, and SB 840/2477 credits together. (Sources: Texas legislative record; ANDRES strategy session 2026-03-13.)

Because office-to-residential is adaptive reuse with one extra constraint. The pattern recognition that matters — inherited column tolerances, unforeseen structural conditions, sequencing demo and abatement so they do not collide with new construction, preserving facade while restructuring the interior — comes from having done conversions before. ANDRES has run hotel-to-residential (Cabana, $116M), government-depository-to-hotel (Aloft / Santa Fe Building), and large-scale historic adaptive reuse (the National, 1M SF / 52 floors, the largest adaptive reuse in Texas at the time). Office-to-residential lives in that same lineage.