Zoning Reform and the OBBB: A New Direction for Suburban Office Conversions

Suburban communities across the U.S. are facing a rare alignment of economic pressure, underutilized commercial space, and a shifting demand for housing and mixed-use development. In this environment, the conversation around zoning reform has picked up momentum—and with it, attention has turned to the Office to Business and Business to Building (OBBB) concept. This approach has emerged as a tool to reimagine the footprint of outdated suburban office parks and dying retail corridors, particularly enclosed malls and Class B or C office space.

The OBBB model, paired with strategic zoning reform, offers an opportunity to reprogram land use in ways that meet real market demands. But unlocking that potential depends on how local governments choose to revise zoning codes and apply them in the real world. This is not a theoretical exercise—developers, planners, and suburban stakeholders are already running into challenges tied directly to outdated zoning designations and resistance to higher-density reuse.

The Pressure Behind the Push

Office vacancy rates in suburban submarkets continue to stay above pre-pandemic averages, and Class B and C buildings have been especially slow to recover. Many of these assets are stranded: too costly to maintain as-is, too outdated to compete, and too restricted by current zoning to convert efficiently. At the same time, many municipalities are facing a housing shortfall, strained municipal budgets, and demands from residents for more vibrant, livable neighborhoods.

This creates a set of contradictory incentives. Suburbs often resist increased density or mixed-use proposals due to fears over traffic, school crowding, or perceived changes to community character. Yet the status quo—vacant buildings, declining retail tax revenue, and deteriorating infrastructure—presents its own long-term risks.

The OBBB approach proposes to flip the use hierarchy: treat commercial properties as land banks rather than fixed-use zones. This shift doesn’t require sweeping urbanization. It simply reframes how existing real estate is allowed to adapt.

Zoning as a Barrier—and a Key

The real constraint for most office-to-residential or mixed-use conversions isn't architectural—it’s regulatory. Suburban zoning codes, especially those written in the 1980s and 1990s, tend to strictly separate uses, enforce low FARs (floor area ratios), require excessive parking minimums, and limit building height and density far below what adaptive reuse projects require.

Even when the market supports the financials for conversion, developers face a patchwork of use restrictions and conditional approvals that add time, legal risk, and soft costs. This makes marginal projects unfeasible and discourages serious investment in reimagining space.

Some municipalities have begun to respond. Fairfax County in Virginia, for example, implemented zoning modernization (zMOD) to consolidate use categories and streamline the approval process. New Jersey’s Office Conversion Act created a state-level path for underutilized office properties to be converted to housing, with local zoning overrides if certain criteria are met. These changes aren’t cosmetic—they directly impact project timelines, costs, and investor confidence.

How OBBB Fits into the Picture

The OBBB model goes beyond single-use conversions. It promotes incremental reuse and a broader framework for repositioning underused suburban space. This could include:

• Converting office interiors to flexible residential or co-living units

• Demalling suburban retail centers into town-center-style mixed-use nodes

• Carving out ground-level office space for medical, childcare, or education uses

• Adding mid-rise infill housing or structured parking to create walkable street grids

Zoning reform is essential here because it determines not just what is allowed, but how much friction exists in the process. Without significant changes to use tables, parking requirements, setback rules, and density caps, the full scope of OBBB-style development remains stuck at the conceptual level.

Dealing With Community Pushback

Zoning reform doesn’t happen in a vacuum. Local politics play a massive role in determining how far municipalities are willing to go. Public hearings on upzoning proposals often attract vocal opposition, especially in single-family neighborhoods adjacent to targeted redevelopment areas. Concerns range from school overcrowding to perceived loss of neighborhood character.

But what’s often overlooked in these discussions is that the properties under consideration—low-occupancy office buildings, abandoned retail sites—are not contributing to neighborhood vitality either. Maintaining the current zoning doesn’t preserve the past; it stalls the future. Cities that have successfully implemented OBBB-style reforms often did so by focusing initial efforts on clear win-win sites: structurally sound office buildings with ample parking, located near transit or employment centers, and far enough from single-family zones to minimize immediate pushback.

Community education is also critical. Framing these projects not as giveaways to developers but as solutions to traffic, affordability, and job retention concerns can reset the conversation. Most residents aren’t invested in defending empty parking lots; they just want to feel like their neighborhood won’t be overwhelmed.

How Developers Should Be Positioning Themselves

Developers exploring suburban office conversions need to be proactive in engaging with zoning boards and planning departments well before submitting formal applications. Those who succeed tend to treat zoning reform as part of the project rather than a separate hurdle. In many cases, the entitlement strategy becomes as important as the architectural program.

Successful repositioning efforts typically begin with parcel-by-parcel analysis, not just of building conditions, but of zoning overlays, existing infrastructure, and political receptiveness. Sites near declining malls, for instance, may have more upzoning potential than stand-alone offices in lower-density areas. Projects that offer tangible public benefits—green space, stormwater improvements, affordable housing components—have a better shot at securing necessary variances or rezoning approvals.

It's also important to track which suburban communities are reworking their zoning codes. Municipalities that

are initiating overlay districts or form-based code pilots should be considered targets for pipeline projects. Timing matters: getting in during a code rewrite window can reduce entitlement risk significantly.

Where Malls Come Into Play

Malls present a special case for zoning reform because they often sit on parcels with significant infrastructure, access, and development potential. But they also bring complexity. Many are owned by REITs or multiple investors, and the existing covenants, easements, and operating agreements can limit redevelopment options.

That said, where mall owners are cooperative—or where parcels can be acquired piecemeal—OBBB principles apply well. These sites can be reimagined into town center-style hubs, with mid-rise apartments, small-scale retail, office incubators, or healthcare spaces replacing or supplementing traditional anchor tenants.

Zoning reform plays a critical role in these conversions. In most legacy codes, malls are zoned for large-footprint retail use and nothing else. The codes often mandate oversized parking ratios, restrict residential use entirely, and prohibit vertical redevelopment. Municipalities that want to unlock these sites need to write zoning that supports hybrid building types, flexible phasing, and density that makes infrastructure investments worthwhile.

Financial Considerations Linked to Zoning Decisions

It’s worth remembering that zoning codes don’t just affect what gets built—they affect how capital gets allocated. Institutional investors evaluating suburban conversion deals often factor zoning risk heavily into underwriting. A site with as-of-right mixed-use entitlements is materially more valuable than a similar site that requires variances or conditional approvals.

Tax incentives and public-private partnerships can help, but without baseline zoning flexibility, even generous incentives fall flat. Local governments that want to attract serious developers and long-term investment need to align zoning codes with current market demand, not just legacy land use assumptions.

The Next 3–5 Years: What to Watch

The suburban real estate market is entering a transition period where formerly untouchable use patterns are now open for reconsideration. Office buildings will continue to see downward pressure, particularly those without strong amenities or transit access. Retail conversion will accelerate, especially in regions with population growth and infrastructure already in place.

Zoning reform will be the lever that determines how many of these projects move forward—or remain stuck in limbo. Municipalities that modernize their codes to support mixed-use, flexible building types and density where appropriate will be better positioned to adapt to changing economic conditions.

For developers, brokers, and property owners, the key is not just waiting for reform to happen, but participating in the process and positioning holdings accordingly. The OBBB concept gives a language and framework for this rethinking—but without legal pathways to support it, the model remains largely aspirational.

The suburbs aren’t static. Neither should their zoning be. The question isn’t whether change will come—it’s whether the regulatory environment will let it happen in ways that are responsive, rational, and sustainable. Those who anticipate and align with that direction will shape the next generation of suburban development.

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