White House Launches Effort To Spur Office-To-Residential Conversions
The Biden administration is getting in on the office-to-residential conversion push, releasing a guidebook Friday morning on how the federal government can help facilitate conversions.
The 54-page guidebook lays out existing and new opportunities from the federal government to create affordable housing through conversion projects. One of the most notable is the land disposition deals the government is putting forward to help reduce development costs.
The Department of Transportation has cleared the way for local transit agencies to make land available at no cost to local governments and non-profit and for-profit developers seeking to develop affordable housing. Some of the land potentially has existing commercial space ripe for conversion, according to the guidebook.
The General Services Administration, in partnership with the Office of Management and Budget, has begun to identify federal properties it could sell, and the guidebook said it will create a public list of these opportunities.
The guidebook also lists federal loans, grants, tax credits and technical assistance programs across seven federal agencies that can help with these residential conversion projects.
One of these programs is the Department of Housing and Urban Development's Community Development Block Grant program, which has seen $10B in funds allocated since President Joe Biden took office. HUD published an updated notice Friday that expands guidance for the CDB program to include financing acquisitions and conversions of office buildings to housing.
“Addressing the affordable housing crisis requires an all-of-the-above approach,” HUD Secretary Marcia L. Fudge said in a release. “The White House guidebook on commercial-to-residential conversions and the updated CDBG notice are just a few of the steps that HUD is taking to help our state and local partners to boost supply.”
The guidebook also has a handful of opportunities for zero-emission buildings, including tax incentives for energy-efficiency improvements, tax credits to use and create clean energy in buildings, and affordable financing to support these projects.
Roughly 15% of the office space in the 105 largest cities in the country is eligible for conversion, according to a National Bureau of Economic Research report. Cities like New York, D.C., San Francisco and Boston have started focusing on revitalizing their business districts through these conversions.
Last week, Boston officially launched its office-to-residential incentives program, which will provide an average tax reduction of 75% to office landlords that pursue a conversion project. In February, D.C. officials announced a new tax abatement program aimed at office landlords interested in converting part of their buildings into housing.
In response to the White House's Friday announcement, Mortgage Bankers Association CEO Bob Broeksmit released a statement saying the association supports the initiative.
“Housing providers are grappling with higher interest rates and rising labor and construction costs at a time when our nation’s housing supply remains inadequate,” Broeksmit said. “The initiatives announced today should help facilitate more commercial-to-residential projects. We encourage state and local governments to ensure zoning laws, tax credits, and subsidies are aligned to take full advantage of these programs.”