An office to flex space conversion works when the building has three things: a large single-story floor plate, parking or land that wraps the full perimeter, and enough exterior wall to hang roll-up doors on both sides. Miss any of those and you are fighting the building. Get all three and the conversion is close to a repeatable spec rather than a custom design job.
Josh Friedensohn’s firm, Greenleaf, has been buying heavily distressed, vacant call centers across suburban Atlanta and the Southeast and cutting them into 5,000 to 10,000 square foot flex suites. He runs the whole portfolio in-house — over 100 buildings across multifamily, mobile home parks, office and industrial.
Below: why single-story suburban office got mispriced, the physical screen that tells you a building converts, the whiteboxing spec suite by suite, who signs the leases, and how the deal gets underwritten on a five-year clock.
Key takeaways
- Single-story suburban office was discounted alongside downtown high-rise office even though it is functionally a different asset class — that gap is the entry point.
- The physical screen is a large single-line floor plate with a parking lot circling the full perimeter, which is what allows roll-up doors on both sides and drive-through circulation.
- The whiteboxing spec: break the building into 5,000–10,000 sf suites, finish 1,500–2,000 sf of each as three or four offices plus a conference room, bathroom and small kitchen, and leave the rest as open warehouse.
- Flex tenants are plumbers, electricians, painters, pest control companies and gyms — businesses that were never shopping for traditional office, so the demand is new rather than recycled.
- Underwrite a commercial reposition as a five-year commitment, because lease cycles set the timeline: three years to reach a rent conversation, then potentially a year of downtime to replace the tenant.
From the Real Estate Pros Show
This article draws on an interview with Josh Friedensohn of Greenleaf Management on the Real Estate Pros Show, hosted by Issa Hanna.
Why Single-Story Office Got Priced Like Downtown Office
The market stopped underwriting office by building type and started underwriting it by the word “office.” Friedensohn’s phrasing: lenders and buyers ran out of office and “threw the baby out with the bathwater.” A single-story suburban building with surface parking has almost nothing in common with a 30-story downtown tower — different tenants, different capital needs, different exit — but both got repriced on the same headline.
Call centers took the worst of it. That work moved overseas or got absorbed by AI, and the buildings emptied completely. What was left across the Atlanta metro and the broader Southeast was a supply of large, vacant, single-story boxes with no obvious buyer and sellers who had already written the value down.
That is the whole entry point. You are not buying a bet on office demand recovering. You are buying square footage and land at a price set by the death of the prior use, then changing the use. Greenleaf’s stated thesis across eighteen years and eight asset classes is finding buildings that have exceeded their current use and repurposing them into something more valuable — office was simply the version of that trade available for the last three or four years.
The discipline worth copying is the rotation. Greenleaf changes asset classes roughly every three to four years: single-family, then student housing, then multifamily, then mobile home parks, then office and industrial, then private debt when commercial lenders pulled back. They bought 70 apartment complexes between 2009 and 2015 while there were only two or three other bidders, then 25 mobile home parks in a two-year run. The pattern is entering while the asset class is still unpopular, not after the story is obvious.
What Makes a Building Convertible: Floor Plate, Land, and Access
Screen for access before you screen for price. The building Greenleaf occupies is roughly a 65,000 square foot floor plan — one long line, single story — with a parking lot that runs a full circle around the structure. That circulation is the asset. It is what lets a truck pull up to a roll-up door on one face of the building, drive through the suite, and exit the other side.
Suburban single-story office typically comes with a lot of land and a lot of access to the building, and those two features are doing more work in the conversion than anything inside. Practical screen:
- Single story, large uninterrupted floor plate. A long single-line plan cuts cleanly into side-by-side suites, each with its own exterior walls.
- Parking or drive aisle on all four sides. No perimeter access on two opposing faces means no drive-through, which means you are selling a worse product.
- Surplus land. Room for maneuvering, trailer parking and the truck turning radius the tenant actually needs.
- Exterior wall available per suite. Every suite needs its own roll-up door, not a shared dock.
Buildings that fail the access test are much harder to reposition regardless of how cheap the price per foot looks. An interior suite with no exterior wall stays office. A building hemmed in by adjacent parcels or set tight against a road cannot get the circulation. Walk the perimeter first; run the numbers second.
A plumber, an electrician, a painter, a pest control company, a gym — they’re not looking for a traditional office, and there’s a lot of them out there. So we started seeing that these service providers needed a warehouse-slash-office component, and we started building it.
— Josh Friedensohn, Greenleaf
The Whiteboxing Spec: How the Suites Are Built
Greenleaf calls the conversion whiteboxing, and it is a fixed recipe applied repeatedly rather than a design exercise per tenant. The sequence:
- Demise the floor plate into 5,000 to 10,000 square foot suites. That size band is where the service-business demand sits.
- Finish 1,500 to 2,000 square feet of each suite as office. Three or four private offices, a conference room, a bathroom and a small kitchen. That is it.
- Leave the balance as open warehouse. Bare, clear, no finishes. The tenant decides what goes in it.
- Install a roll-up door on each side of the suite. Tenants drive straight through the building.
The reason this works as a spec is that the front office component is small and identical across suites, so you are not rebuilding the mechanical and finish package for every deal. You are converting a fully finished office interior into a mostly empty box with a small finished nose — which is subtractive work, and subtractive work is cheaper and faster than building out full office.
Two things follow from that. First, your cost per square foot on the warehouse portion is low because you are not adding much. Second, the product leases without further capital: a tenant taking 5,000 square feet gets the office they need and a warehouse they can configure, so you are not writing a big TI check to sign them. Friedensohn describes the resulting product as in very high demand, which is the point of standardising — a building that was out of its useful life fills up on one repeatable buildout.
Who Actually Leases Flex Space
The tenants are trade and service businesses that were never in the market for traditional office. Friedensohn’s list from the Atlanta suburban portfolio: plumbers, electricians, painters, pest control companies, gyms. None of those businesses could use the building in its original configuration, and none of them were competing for it before the conversion.
That distinction matters to underwriting. You are not carving a shrinking office tenant pool into smaller pieces. You are adding a tenant pool that did not previously exist for this building, made up of operators who need a warehouse component plus a modest office component in the same suite — vans and trucks and inventory in the back, a dispatcher and a couple of desks and a conference room in the front.
Those businesses are also numerous. Friedensohn’s observation is simply that there are a lot of them out there, and that when traditional office went to work-from-home and hybrid, these service providers were the ones still looking for space and struggling to find the right configuration. Demand from them is tied to local household and construction activity, not to corporate return-to-office policy.
The practical consequence is that a 65,000 square foot vacant building stops depending on landing one large credit tenant. Broken into eight to twelve suites, it depends on filling several small local businesses — which spreads rollover risk, keeps any single vacancy from wrecking the year, and means you are marketing to trades in the surrounding submarket rather than to corporate tenant reps.
Underwriting the Rotation: Cap Rate Spread vs. Distress Upside
Greenleaf made money on office two different ways, and the second only started because the first stopped working.
The first was pure spread. Their first large office purchase was a 110,000 square foot building in Chattanooga bought for $20 million at an 8.5 cap in place, with a 10-year lease to the State of Tennessee. They financed it at 3.5% fixed for 10 years. That is a 500 basis point gap between cap rate and cost of debt, and Friedensohn is direct about what it does: a tremendous arbitrage to yield returns. No repositioning required — the return came from the capital stack. They repeated it across roughly a 30-building run.
Then the spread closed. When debt costs move up toward or past in-place cap rates, the arbitrage deal stops penciling and there is nothing to do but change the source of the return. That is when Greenleaf went back to distress and started buying vacant single-story office to whitebox. The return now comes from the price you paid, the conversion cost, and the rent the new use supports.
Friedensohn expects rates to stay higher for longer and to keep drifting up, on the view that government spending is not coming down, and that this pushes cap rates up with them. If that is right, two things follow for how you underwrite: exit cap assumptions should not be tighter than your entry, and well-positioned assets with stable cash flow and strong tenants become more valuable, not less. Which is another argument for the flex conversion — you are manufacturing occupied cash flow in a market where occupied cash flow is what gets bid.
Hold Periods, Lease Cycles, and Rebuild Risk
Underwrite a commercial reposition as a five-year commitment, because the lease cycle sets the pace, not your renovation schedule. Friedensohn’s math: if the business plan is to raise a tenant’s rent or replace them with a higher-paying tenant in year three, you wait three years just to have the conversation. If you replace them, budget roughly a year of downtime to re-lease. That is four years before the value creation shows up, inside a five-year story.
Real holds run longer than the plan. Greenleaf sold a deal last week they had owned for 11.5 years, went under contract on another at 12 years, and is looking at selling one held 14 years. Plan for the five-year case in the model and have a capital structure and investor expectation that survives twice that.
The other timeline risk is rebuild-to-code after a loss. Greenleaf has had a lot of fires over the years, and the instinct — rip out the burned portion and put back a cleaner version of what was there — often is not allowed. In many cities, older units do not meet current minimum square footage: a 1960s or 1970s two-bedroom at around 700 square feet against a current minimum closer to 1,000 means you cannot rebuild the unit as it existed. You have to rebuild it larger.
Get past that and you still have to hardwire the building for smoke detectors and add sprinklers, systems that did not exist when the building went up but are required on rebuild. A total loss is rarely replaced in kind, so insurance proceeds set against original construction can leave a real gap.
Frequently asked questions
What size suites should a vacant office building be broken into for flex conversion?
Greenleaf demises its buildings into 5,000 to 10,000 square foot suites. On a 65,000 square foot single-line floor plate, that produces roughly eight to twelve tenant spaces, each with its own exterior walls and roll-up doors.
That band matches the size a local trade or service business can absorb, and it spreads rollover risk across many small tenants instead of concentrating it in one large lease.
What kinds of tenants lease converted office-warehouse flex space?
Service and trade businesses. Friedensohn’s tenant list from the suburban Atlanta portfolio includes plumbers, electricians, painters, pest control companies and gyms — operators who need warehouse space plus a small office component in the same suite.
These are not displaced office tenants. They were never shopping for traditional office at all, which is why the conversion creates new demand for the building rather than competing for a shrinking pool.
How long should I underwrite a commercial office repositioning to take?
Five years is the realistic floor. Lease cycles dictate the business plan: if the plan is to reset a tenant’s rent in year three, you wait three years for that conversation, and if you replace the tenant instead you may carry a year of downtime.
Actual holds often run much longer. Greenleaf has sold deals at 11.5, 12 and 14 years, so build the model on five and make sure the debt and investor structure can carry more.
Why is single-story suburban office valued differently than downtown office?
Because it is a functionally different asset class that got repriced on the same headline. Single-story suburban office typically comes with a lot of land and full-perimeter access, which makes conversion to flex or warehouse-office possible — a downtown high-rise offers neither.
Friedensohn’s view is that the market threw the baby out with the bathwater on office, and that mispricing is what let Greenleaf buy heavily distressed vacant call centers at prices set by the death of the prior use.
If a converted building burns down, can I rebuild it the way it was?
Often not. Older units frequently fail current minimum square footage requirements — Friedensohn cites 1960s and 1970s two-bedrooms around 700 square feet against a present-day minimum closer to 1,000 — so you may be required to rebuild larger than what burned.
You will also typically be required to hardwire smoke detectors and install sprinklers on rebuild, systems the original building never had. Insurance proceeds based on the prior structure can fall short of the cost to rebuild to current code.
The bottom line
Before you price a vacant single-story office building, walk its perimeter and confirm you can put a roll-up door on two opposing faces of every future suite — that one check tells you whether the whiteboxing spec applies or whether you are buying dead office at a discount.
