As nearly one-fifth of office space across the country sits empty thanks to a record-high vacancy rate that’s expected to keep growing, cities across the nation are taking steps to make it easier to convert the unused space into residential units, Louisiana Illuminator reports.
Cities are taking steps to reduce approval times and are giving exemptions from affordable housing rules and changes in building code requirements. Other cities are providing tax incentives or subsidies to developers.
“Cities need to focus on making conversions feasible by removing unnecessary regulatory barriers,” says Alex Horowitz, project director of the Housing Policy Initiative at The Pew Charitable Trusts. “The U.S. is short millions of homes, and office vacancy rates are at record highs. It makes all the sense in the world to convert underused commercial space into housing, but the cost per square foot is just too high.”
Purchasing and converting an office building for residential use costs an average of $685 per square foot. Buying a completed multifamily property costs an average of $600 per square foot, while building a new multifamily development costs about $588 per square foot.
In September, Minneapolis peeled away several regulations in an effort to encourage conversions, including removing public hearing requirements, requiring less intensive traffic studies, and exempting converted buildings from the typical requirement that 20% to 30% of units be rented at below-market rates.
On the West Coast, San Francisco has waived certain planning and building code requirements as well as real estate transfer taxes for downtown conversions that are approved before 2030.
