Live-Work Office Properties: A Blueprint for Work-life Integration
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Thanks to the aftershock of the COVID-19 pandemic, some 75% of businesses in the US are now considering permanently implementing some kind of hybrid or remote work schedule.
As a direct result, the live-work office property has emerged from the darkness and into the focus of the modern commercial property owner.
Live-work office properties provide remote workers with the best of both worlds: a separate quarter for living and a separate quarter for working. Because remote workers are now driving the market in several noticeable ways, experts expect these live-work arrangements to only grow in popularity.
Here, we'll take a closer look at live-work office properties and the blueprint they provide for better work-life integration. We'll discuss their pros and cons, purchase considerations, property types, and more.
Let's get started.
What Are Live Work Office Properties?
Live work units are office properties that are built to accommodate both residential and non-residential activities.
A live-work property essentially combines your office and living quarters into a single space, providing both a dedicated residential partition and a dedicated commercial partition in the same building.
Live-work properties are ideal for remote workers looking to separate work from life and enjoy office space amenities without having to leave the comfort of their home.
Types of Live Work Office Properties
A simple example of a live-work space is an artist's loft: The loft contains a large space for commercial activity and a connecting space for residents to live in.
Other types of live-work spaces include retail shops with residential units above the storefront or townhouses/apartment complexes with commercial spaces below the residential units on the first floor.
Live-Work vs. Work-Live Properties
Some cities distinguish between live-work and work-live properties differently depending on how dominant the non-residential components are.
Live-work properties are primarily for living and have a smaller workspace accessory, while work-live properties are focused on the workspace, with a living space as an accessory.
Different states have different rules and definitions about live-work office properties, so make sure you understand local housing codes and regulations before investing in commercial live-work properties.
Benefits of Live Work Office Properties
The concept of a live-work property is not exactly new. Still, as more workers move to embrace hybrid and remote work, a live-work space can provide several notable benefits.
#1 – Increased Productivity
Perhaps the greatest benefit of a live-work space is that it can boost productivity. Live-work spaces eliminate commutes and time spent getting to work, which means more time spent on projects.
There's also a growing body of evidence to suggest that remote work arrangements can increase worker productivity.
#2 – Environmental Benefits
The prevalence of live-work units is also a plus for the environment. A lack of commute means fewer people drive; hence, fewer greenhouse gasses and less air pollution are produced.
From a business owner's perspective, live-work units save money: Fewer management and upkeep costs are involved compared to traditional office space.
#3 – Better Work/Life Integration
Lastly, live-work arrangements for remote work are great for promoting work-life integration.
According to Forbes, many reported that remote and hybrid schedules promote happiness and job satisfaction, whereas full-time office workers reported feeling the least satisfaction.
Downsides of Live-Work Properties
Live-work properties have a lot of benefits in today's post-COVID remote work world, but they aren't perfect.
Below are some drawbacks to live-work properties.
#1 – Zoning Issues
The single biggest drawback of live-work properties is zoning issues. Live-work units need the right zoning classification, or tenants may easily run into issues.
For example, a live-work unit might not be zoned for the specific work the resident performs. That's why we recommend working with a commercial real estate broker.
Brokers can ensure property zoning is appropriate for whatever work is performed so you can avoid unnecessary headaches. A broker on your investment team can also help you negotiate sales and lease contracts.
#2 – Distractions
For some workers, a live-work office space might increase distractions, especially if they live with roommates or family.
Depending on the home environment, it may be difficult for some workers to separate their job duties from their personal lives.
#3 – Resale Difficulties
From an investor perspective, reselling a live-work office space might be difficult. Live-work spaces are for a specific kind of tenant or buyer, and demand for live-work spaces might be more volatile than traditional residential or commercial property demand.
Can You Live in a Commercial Property or Office?
It depends on your local zoning laws. If the property is zoned for mixed-use, you should be able to claim it as your primary residence so long as it meets local regulations for habitability.
If, however, the property is not zoned for mixed-use, you can submit an application for a zoning permit with your local municipality. Should your application be approved, you can change the use of the property.
Considerations When Buying Live-Work Properties
Live-work properties are a relatively unique and niche property type, so be sure to do your due diligence before buying.
Whether you're buying a live-work office space for yourself or to lease, make sure to consider the following features:
- Check nearby businesses and locations for potential distractions. For example, a live-work property near a busy and loud restaurant might not be best for productivity.
- Does the property allow for multi-tenant use? For example, you can rent out the commercial and residential parts to separate parties.
- What kind of lease will the property have? Keep in mind that, in a commercial lease, the tenant may have to pay property insurance, taxes, and maintenance.
- Similarly, you may have to get a commercial loan to finance a live-work property. Commercial loans often have higher rates than residential mortgages.
Live-work properties have exploded in popularity, with the number of live-work units nearly quadrupling in major cities across the nation over the past decade. Picking the right location to buy a live-work office space ensures you can get the maximum value from your investment.
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