Suburban municipalities that in the 1980s courted office buildings as the perfect new source for coveted tax revenue — nearly invisible neighbors with no impact on school systems — now accept the fact that some of those buildings will be replaced with apartment complexes and mixed-use projects. In Woodcliff Lake and Montvale, New Jersey, plans are under way to replace office sites with multi-family housing. In Upper Saddle River, New Jersey, the former Pearson publishing headquarters awaits redevelopment as multi-family residential.
The Great Recession that began in 2008 and the accompanying job loss are often cited as the death knell for the suburban office market, but the first blows were struck almost a decade earlier, as technology reduced the number of white-collar jobs in those office buildings. The pandemic was the final straw for some of these older buildings. Nearly two years into the COVID-19 pandemic, roughly six out of ten U.S. workers who say their jobs can mainly be done from home are working from home all or most of the time. Leasing demand is way down and vacancy is rising, with little hope for replacement tenants.
While municipalities are concerned about the impact of additional residents from apartments on services, the prospect for lost tax revenue from vacant or abandoned office building is worse. Some municipalities are hoping for retail, self-storage or other uses for obsolete office buildings as a better option.