Cities Push to Convert Deserted Office Buildings Into Condos

From a story on axios.com by Kate Morino headlined “Cities push to convert deserted office buildings into condos”:

Cities and states across the country are looking to transform vacant office buildings into housing — a solution for both empty downtowns and housing shortages.

Why it matters: Commercial districts with little to no residential presence turned into near ghost towns during the pandemic, becoming a blight on the cityscape and a detriment to local businesses like shops and restaurants.

  • Live-work neighborhoods, however, fared better.
  • And much of the U.S. still faces a persistent housing shortage.

What they’re saying: “We need to recognize how we’ve evolved during the pandemic,” said Dan Garodnick, New York City’s director of city planning and the chair of a new Adaptive Reuse Task Force that’s expected to recommend regulatory changes by the end of the year that would spur conversions of obsolete office buildings.

  • Adaptive reuse of old office buildings has happened on the margins for decades, but the pandemic has accelerated interest in it, says Wendi Shafran, a principal at FXCollaborative Architects, and also a member of the N.Y.C. task force (views her own, not the task force’s).

The big picture: Despite the fact that offices are still only half-full in many cities, these types of conversions have yet to really pick up steam. They’re expensive, and loads of red tape and zoning laws usually get in the way.

  • But a few big cities are creating new incentives they hope will unleash a wave of housing conversions in the decade ahead.

State of play: It’s not just New York. Chicago just this week proposed an initiative to repurpose high-vacancy buildings in its downtown financial district into homes, offering tax credits and incentives along with financing tools.

  • The Los Angeles City Council is expected this fall to consider an updated ordinance that would provide financial incentives and wider eligibility to convert downtown office buildings.
  • California’s 2023 budget allocates $400 million in incentive grants for office-to-residential conversions; Denver’s provides funds to study the matter. Washington, D.C. Mayor Muriel Bowser pitched a 20-year tax abatement tied to these kinds of conversions.

Converting office buildings won’t alone solve the housing shortage, but it’s one of many avenues that government officials want to tap to make a dent in the problem.

By the numbers: Real estate trade association REBNY estimates that a “conservative” conversion rate of 10% of N.Y.C’s lower-tier office buildings could generate approximately 14,000 new residential units.

  • And an L.A. study by Rand Corp identified underutilized commercial properties that could collectively produce about 92,000 housing units.

Between the lines: Adaptive reuse of existing buildings is also gaining popularity for its environmental benefits, says Roberto Vazquez, project director at Omgivning, an L.A.-based architecture firm.

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