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Tumbleweed drifting down the empty halls of deserted skyscrapers. After COVID, that was a commercial realtor’s worst nightmare. White-collar workers appeared to be digging in, resisting a return to commutes and cubby holes. What if they never came back to prime office space that rents for as much as $106 a square foot?

In the short term, the concern appears overblown. Many firms did cede property during the peak of the pandemic, but 64 percent of business leaders in one recent survey said their companies still have a physical footprint. Another 20 percent said they will have one by the end of 2024. Just four percent said “never again” to having a headquarters.

Giving glass towers new purpose

Still, with a hybrid work model taking permanent hold, full occupancy in the nation’s business cubicles is unlikely. As McKinsey reports, demand for office space could, in worst-case-scenario cities, plunge by 38 percent in just seven years time.

Meanwhile, acute housing shortages have prompted governments at every level to back the transformation of commercial properties to residential ones. There’s money and momentum behind the movement. Projects already underway could soon see office conversions produce 45,000 multifamily units across the country.

Getting in on the ground floor

So what does this mean for investors? Opportunity, if you play your cards right. It might be an ideal time to get behind businesses with experience in repurposing underused structures or retrofitting those that need it.

One builder showing that kind of know-how is Kilroy Realty Corporation (KRC). The L.A.-based enterprise recently converted a group of derelict warehouses and garages in the Culver City area into a 19-building multi-use tech, media and residential complex. The company has done well in the process: It posted revenue of more than $1 billion in 2022 and in fiscal 2023, it grew by 10.42 percent year over year.

Engineers driving the train

To be sure, adapting property for residential use isn’t an easy undertaking. In many cases, buildings have to be entirely gutted or totally reconfigured to accommodate kitchens, bathrooms and the fixtures they require. Suppliers and engineers who make the work possible are poised to do well.

To that end, project managers will no doubt be turning to companies like Tutor Perini Corp. (TPC). The venture has a long history of restoring and retrofitting structures following catastrophes like Hurricanes Katrina and Sandy. As a one-stop shop that provides everything from general contracting, project management and engineering, it could be well positioned to take advantage of the boom in office tower repurposing. While the firm’s revenue fell by over six percent last year, it had a strong second quarter, showing 18.67 percent year-over-year growth.

Another enterprise to consider in that regard is Emcor Group Inc. (EME). Its field is electrical and mechanical construction, as well as energy infrastructure. Emcor, which had nearly $12 billion in revenues this past year, recently bought ECM, specialists in heating, ventilation, air conditioning, lighting and energy retrofitting. That could enhance the firm’s credentials if it chooses to bid on big conversion projects.

Suppliers with innovative offerings

The availability of natural lighting will be key to making former office space truly habitable. But providing that light is going to take some doing. One firm with a product with promise is Kingspan Group ADR (KGSPY), an Ireland-based materials firm that focuses on building envelopes and insulation, among other aspects of the construction trade.

With its recent acquisition of Solatube, its expanding its retrofitting and repurposing capabilities with so-called Tubular Daylight Devices (TDDs) that capture sunlight and redirect it where needed. The company’s revenue was down by two percent in the second quarter, but it still had a healthy after-tax profit of about $340 million.

Plumbing, too, will be key for successful conversions—and the Fastenal Company (FAST), which has a range of retrofitting kits for the trade, supplies these products across North America and elsewhere. Its inventory appears to be in demand: The company has an estimated market cap of $29 billion and in the 12 months ending on June 30 showed 10.22 percent growth year-over-year.

In the end, it’s going to take a village to transform office space into, well—a village. But the will appears to be there. And where there’s a will, there are usually sound investments to be made.