Developers and building owners may be able to leverage billions of federal dollars to convert vacant office properties into residential uses under guidelines the White House unveiled late last month.
The wide-ranging guidelines include actions by the Department of Transportation, the Department of Housing and Urban Development, and the General Services Administration. They cover ways to boost housing supply by repurposing properties near transit, acquiring, rehabbing and converting commercial properties and selling/redeveloping surplus federal properties.
Workshops for local and state governments, real estate developers, owners, builders, and lenders on how to use 20-plus federal programs across six federal agencies for commercial-to-housing conversions will be hosted by the White House later this year. A guidebook is also underway.
In a Fact Sheet announcing the new resources, the Biden-Harris Administration said the actions “will create much-needed housing that is affordable, energy efficient, near transit and good jobs, and reduce greenhouse gas emissions.” Zero emissions conversions are promoted. The statement also notes the latest actions build upon initiatives in the White House Housing Supply Action Plan and promote fair housing.
The statement from the White House encourages state, local, tribal and territorial entities to identify public tools and land disposition opportunities to facilitate conversions.
Concurrent with the announcement the Department of the Treasury posted a blog describing tax incentives and benefits for builders of multifamily housing. It details six incentives, ranging from energy credits to rebates whether building new, reconstructing or rehabbing buildings. Clean energy and alternative fuel vehicle refueling property incentives are included. The document also notes a building owner may be eligible for multiple incentives.
An estimated 15% of office buildings in commercial districts in 105 of the largest U.S. cities are physically suitable for conversions, according to a working paper by the National Bureau of Economic Research. That potential drops by 4% when properties that have a large share of long-term tenants or are considered relatively clean are eliminated.