Edit: from the SFChron article mentioned above:
> “Finding the deal for us is almost like the needle in the haystack,” he said. “We had to basically build a brand-new building within a building. It’s not for the faint of heart.” > > Each apartment at 229 Ellis St., ranging from 180 to 300 square feet, cost around $400,000 to build out, less than ground-up construction.
Seems expensive for that tiny of a space.
Office buildings are often concrete with drop ceilings to make it easy to access sprinklers, wiring, and pipes, but you would still need to run all of those things across every floor of the building.
A single, modern condo likely has 2+ full baths, so if you're trying to get 10 units per floor, you're going to do that work 20+ times.
Kitchens are also difficult, yes. You need to be able to vent heat and smoke, and you need different electrical wiring in most cases.
Then think about ceilings. Drop ceilings are not appealing to most people, so you need a solution for that. Even if you keep the drop ceiling and just use a nicer tile, you're still spending $5-$30/sqft.
Walls aren't that expensive, but you need a lot of them to convert back from the trendy open-office plans that most buildings have.
There's also a lot of legal work to convert to condos (assuming you don't want to do rentals, which most of these office owners absolutely don't want to do).
There's just a much bigger difference between office and residential space than people realize, I think.
The actual problem is that it costs an enormous amount of money to retrofit commercial properties as residential.
Source: currently have dozens of commercial RE clients