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Advocates call for vacant commercial space to be converted into affordable housing

With those of commercial buildings sitting empty due to the coronavirus pandemic, some are looking to repurpose those spaces for affordable housing.

The onset of COVID-19 and the need for social distancing has resulted in hundreds of hotels sitting empty, while offices remain vacant as people work from home instead. The sudden availability of all of those ready-made buildings has prompted calls for it to be transformed into low-cost housing instead to help alleviate shortages in many parts of the U.S.

Andrew Trueblood, director of the D.C. Office of Planning, told FOX Business that he believes many empty commercial buildings can be converted into affordable apartments, helping to meet the demand for more affordable housing inventory.

“The demand for office space is continuing to change,” Trueblood said. “I would say it has accelerated what we’re already beginning to see in terms of you don’t need…as much space per person, and especially as there is more opportunity to telework.”

The process of converting empty commercial buildings into housing won’t be easy though, as two significant challenges – costs and zoning – prevent a big obstacle to the idea.

John E. Akridge, a real estate developer in Washington, D.C., told FOX Business that he had already completed one conversion project that saw an old Coast Guard warehouse transformed into an apartment building.

“It wasn’t particularly difficult, it was just expensive,” Akridge explained. “One of the most expensive things we did is we cut 25% of the floor space out of this building to create these courtyards that opened up the interior of the building for light.”

Despite the expense, a number of influential figures have called for vacant commercial spaces to be transformed into affordable housing. Last summer, then U.S. Housing and Urban Development secretary Ben Carson said that the growth of remote work would free up a lot of commercial space that could potentially be converted into affordable housing.

And realtor.com’s chief economist George Ratiu said last year that office-to-residential conversions could be a “win-win solution in some cities” that have seen a decline in lease renewals and a shortage of housing.

Complicating things is that, with COVID-19 vaccinations underway, many companies are expecting to get their staff back to work at the office later this year. Trueblood told FOX Business that there will undoubtedly “still be a presence and still be a need for office space.”

Still, a lot of companies are actually planning for a hybrid work scenario that will see their employees spend a lot of time working remotely, and perhaps only visiting the office once or twice a week. That will mean less demand for commercial spaces, so a good chunk of the vacant offices will remain empty, available to be repurposed.

It will take a lot of planning, but politicians have already made moves to facilitate the transformation. In March for example, lawmakers in New York state introduced a new bill that, if passed, would allow the state to buy financially distressed commercial buildings such as offices and hotels, and convert them into housing for low-income and homeless persons.

Some efforts at transformation were underway even before the COVID pandemic emerged. For instance in Cleveland, developers there have worked to convert a number of aging factories, offices and department stores into apartments, though most of those projects are targeted at higher-end buyers.

The Downtown Cleveland Alliance says that around 60 buildings in the city have been converted using state and federal tax credits, and that around 2.5 million of its 4.5 million square feet of empty commercial space in the mid-2000s has now been transformed into housing or hotels.

Mike Wheatley

Mike Wheatley is the senior editor at Realty Biz News. Got a real estate related news article you wish to share, contact Mike at mike@realtybiznews.com.

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