Most buildings constructed since WWII were purpose built, reflecting design choices and efficiencies that permitted the best use of space for their explicit purpose. Window heights, column spacing, fire stair locations, all of these aspects are asset class specific.
The Washington Post recently discovered that the increasing vacancy of suburban office campuses is problemmatic.
The building in North Bethesda has eight floors. It is 98.7 percent vacant. There is one life form within its nearly 210,000 square feet — not counting the lobby fern on life support — and she wears a security uniform, sits at the front desk and listens to the muffled whine of a faulty alarm for hours at a time, every day between 6 a.m. and 2 p.m.
The loss of tenants in these developments reduces real estate tax collection, reduces employment, and generally increases the share of maintaining infrastructure on those who remain. The Post has done a decent job of documenting this decline across the DC metro.
“One of biggest challenges is that 1980s, successful classic suburban development in Rock Spring and [Interstate-270] corridor may have insurmountable challenges to re-gear and meet current market demand for Metro, mixed-use environments, amenities and walkability,”
The rise and decline of these developments was chronicled in Louise Monzingo's 2011 book Pastoral Capitalism. Crain's Chicago documented this contemporaneously, noting that restructuring reasons created the ability for Sara Lee to relocate from Downer's Grove (an attractive rail-oriented location in the western suburbs) to downtown Chicago.
Only The Boston Globe attempted to discuss any reuse of these properties. In a 2014 piece, The Globe noted:
[Tye] added that it’s also hard to duplicate urban settings within suburban parks if they’re not near public transit and don’t have easy pedestrian access to offices. “This is a source of some disagreement within the industry,” he said of housing’s role in office park redevelopment.
In contrast, Nordblom Co., owner of Northwest Park in Burlington, is a firm believer in “live, work, play.” Three years ago, it launched a massive $500 million project to redevelop about half the 285-acre office park to include 600,000 square feet of retail space, 300 new apartments, a 225-room hotel, and 3.5 million square feet of new or refurbished offices.
None of the projects cited by The Globe included reuse of the existing structures, merely the land. While I'm not aware of many reuse projects involving suburban residential, as this housing stock ages into its 30th and 40th years, the economic potential of these properties is likely to decline absent a more intense development of nearby parcels. Insightful purchases will be essential if these properties are to provide above market returns.