As of: February 13, 2024, 1:12 p.m
By: Fabian Hartmann
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There is still a lack of living space in Germany.
Can converting empty office buildings into apartments alleviate the housing shortage?
Frankfurt – According to the Hans Böckler Foundation, there is a shortage of around 1.9 million affordable apartments in major German cities as of December last year.
This includes around 1.4 million affordable apartments for single-person households measuring less than 45 square meters, which means that singles with low incomes are facing increasing problems finding affordable housing.
There is also still a lack of social housing.
There could be a total of 700,000, according to a study carried out last autumn by the Pestel Institute for the Social Housing Alliance.
Accordingly, increased immigration from Ukraine and other European countries has also contributed to further exacerbating the housing shortage in Germany.
Added to this are constantly high construction prices and increased interest rates, which have caused housing construction to stall for some time.
In order to alleviate the housing shortage, Construction Minister Klara Geywitz (SPD) in September 2023
drawn up a 14-point plan.
Accordingly, the federal government wants to make a total of 18 billion euros available to housing construction by 2027.
Geywitz has also long been in favor of making empty office space usable as living space.
But how realistic is it to convert unused office buildings into affordable housing?
Vacant office space – experts do not expect a reversal of the trend
In fact, according to a survey by the Ifo Institute, the number of unused office spaces has roughly tripled since the pre-pandemic year of 2019 to the present day.
According to Manager Magazine,
the vacancy rate in Hamburg is
now 4.6 percent, in Munich it is 5.6 percent and in Berlin it is 5.4 percent.
It is particularly high in Frankfurt at 8.9 percent and in Düsseldorf at 9.9 percent.
Research by
Manager Magazine
shows that behind these numbers there are sometimes huge office building complexes: including the 70,000 square meter brake factory in Berlin-Friedrichshain not far from the Ostkreuz or the Skyline Tower in the former Osram building in Munich with over 20,000 square meters.
Experts are currently not assuming that the persistent vacancy rate for office space will reverse again.
The home office has settled at too high a level for that.
While the home office rate was around 10 percent before the corona pandemic, it was already 24.2 percent in 2022.
Current forecasts assume that the rate will continue to level off at around 25 percent in the future.
The economic survey by the ifo Institute from last November (November 16, 2023) underlines this: According to this, 84 percent of companies in Germany want to maintain their current home office rules.
This is what the 2024 federal budget provides to alleviate the housing shortage
In the recently approved federal budget for 2024, the federal government is granting the states subsidies of 3.15 billion euros for social housing.
That is 150 million euros more than originally estimated.
In the period from 2022 to 2027, the federal government will provide 18.15 billion euros for social housing.
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In order to promote the construction of affordable housing, the federal government also launched a new KfW funding program worth two billion euros in January (January 19, 2024).
According to Construction Minister Klara Geywitz, the Bundestag Budget Committee has given the green light for this.
Funding should begin as quickly as possible.
In particular, the construction of small and affordable apartments, such as those needed by single parents and seniors, should be supported.
The construction industry welcomed the funding program.
According to Geywitz, the construction of small and affordable apartments, such as those needed by single parents and seniors, should be particularly encouraged.
The rents should be in the lower and middle price segment.
“The funding doesn’t just pour watering cans into big pockets, but rather achieves affordable living space through restrictions on rental prices,” said SPD deputy parliamentary group leader Verena Hubertz.
This is urgently necessary in times when rental prices rise many times over in a very short space of time.
Converting unused office space into living space is possible, but not without problems
Given the persistently high home office rate and the comparatively low utilization of office space, one might think that the housing shortage could be alleviated by converting office space into living space.
But is it possible to convert office space into living space, and is former office space even suitable as living space?
“In principle, this is possible,” explained economist Tobias Just, who heads the chair for real estate economics at the University of Regensburg, in an interview with
Bayerischer
Rundfunk.
In practice, however, converting office space into living space can prove problematic for several reasons.
“Offices naturally function differently than apartments,” explains Just. As a result, escape and use routes would have to be adapted.
Lighting, ventilation, plumbing and heating systems are also some of the important areas of the renovation.
It also remains questionable whether there is any demand from tenants in the areas where the office buildings are located.
Empty office complexes tend to be located in the outskirts in an unattractive manner, and often in industrial areas.
Office buildings in top locations with rising top rents – affordable living space in unattractive locations
At the moment, according to Just, some investors no longer see any lasting opportunities in the offices.
Instead of making as much profit as possible, it could actually be a matter of minimizing losses.
Because many office complexes with excellent locations are too big and too expensive.
For these high-quality buildings, “the prime rents are currently rising even further because companies are prepared to pay high prices for the few top locations,” explains Katharina Biermann, managing director of the commercial real estate consultancy Avison Young, to
Manager Magazine
.
Ultimately, there is no question about the possibility of turning offices in such locations into affordable housing.
And not only because many possible conversions tend to result in high-priced apartments, such projects hardly alleviate the housing shortage, explains Tobias Just.
According to Just, it probably won't be possible to repurpose enough to provide lasting and massive relief to the housing market. Around 200,000 new buildings are currently needed every year - compared to around "a few 10,000" potential existing conversions, according to the real estate economist.
So this market would not be enough to really solve the housing problems.
Just speaks of individual examples and “a few cases in Frankfurt and Eschborn”, but also points out the previous reluctance of investors.
(Fabian Hartmann)