Broker sent me a 1962 office building at $38/sf. What kills this first?

Before anything physical, find out whether residential is allowed in that district by right or whether you need a rezoning or a use variance. Downtown office districts sometimes permit residential outright, sometimes only above the second floor, sometimes not at all without a conversion overlay. That answer changes your timeline by 12 to 18 months and it's free to get. Call the planning counter and ask for the zoning district and the permitted use table.

The geometry is what kills it. Residential units want somewhere around 30 to 35 feet from the window line to the corridor before bedrooms go dark and the plan gets silly. You've got a center core on a 100 by 120 plate, so measure glass to core face on each side. If that's 40 to 45 feet you are either building very deep units with interior bedrooms that many jurisdictions won't let you count as bedrooms, or you're cutting a light court through four floors of structure, which is expensive and eats rentable area on every level.

11 ft floor to floor is workable in principle. Check whether the structure is flat slab or beam and girder, because after you run new sanitary, supply, and ventilation you may land at 8 ft clear in corridors, and that's the number a buyer feels.

The acquisition price is close to irrelevant. Conversion hard costs get quoted per unit in the low to mid six figures depending on market and how much of the shell you keep, so at 45 units your construction budget dwarfs the $1.8m. Getting the building for free wouldn't rescue a plan that doesn't pencil.

Two things you didn't raise. The 22% occupancy is a real problem, not a bonus. A construction lender wants the building empty and you can't gut floors around a tenant with quiet enjoyment rights, so read those leases for demolition or relocation clauses and price buyouts. And a 1962 building means an asbestos survey for floor tile, mastic, and spray fireproofing before you're hard on deposit. Abatement on 48,000 sf is a line item that has ended deals on its own.

Egress and sprinklering, confirm the residential requirements with the local building official in writing rather than from the code book alone.

I've been trying to pin down that per unit hard cost number for months and nobody gives the same answer twice. Does anyone actually have a range they'd defend for a plain Class C office in a mid-size city? Every article says "can rival new construction" and then stops.

@tally the reason nobody defends a number is that half the cost is building specific. Two identical looking 1960s boxes can be $80/sf apart depending on whether the windows open, whether there's usable riser space, and whether the slab is post tensioned so you can't cut it wherever you like.

On the dead core, @rigging, that leftover middle area isn't a total loss. It becomes storage lockers, a gym, mail, trash. You just can't charge rent for it, so your efficiency ratio drops and your cost per rentable foot goes up.

I'm asking because I want to know. Is a 45 unit conversion something a single person does at all, or is the first honest answer that this is a team sport with an architect, a contractor, a zoning attorney and a lender all in place before you sign anything? I keep trying to figure out which strategies fit one person and this one is starting to look like it doesn't.

Windows. 1962 means single pane fixed glass in aluminum frames with no thermal break, and residential code will want operable units with fall protection plus something an occupant can live behind in August. Full replacement on a 48,000 sf building with that much glass area is a seven figure line by itself in a lot of markets. It's on my checklist right under "can I get two stairs".

I run thin margins on fast stuff and this is the opposite of that. You'd be carrying interest, taxes and insurance on a mostly empty building for two years before a single rent check arrives, and vacant building insurance is not cheap. If the city is "talking a lot" about wanting housing, find out whether that means an actual adopted program or a councilmember's press release, because those are very different things to underwrite against.