All eyes are on Boston's office-to-condo experiment

• But they're a tough sell — very expensive, with lots of engineering challenges.

Driving the news: Developers have until June to apply for an incentive program announced last year by Boston Mayor Michelle Wu, and would need to start construction by October 2025.

• The program dangles a tax discount of up to 75% for up to 29 years.
• 20% of the converted housing units must be "affordable," as defined by income restrictions.
• The goals are to "increase economic activity in downtown Boston by increasing the amount of people living downtown, while helping stabilize the office market," the city explains.

What they're saying: "This is probably a once-in-a-generational opportunity for people to invest in Boston," says Prataap Patrose, senior adviser to the director of the Boston Planning and Development Agency.

• "People are recognizing that," he told Axios. "We're recently getting a lot more national interest — from New York especially, but also from the West Coast as well, developers and investors."

If all the projects in the pipeline come to fruition, "it would significantly change the character of some of the places that the units will be built," says Arthur Jemison, director of the Boston Planning and Development Agency.

• "So we're very excited about not just the proposals, but the implications for the activity level and excitement about downtown."
• The program is supported by everyone from affordable housing activists to conservative real estate developers who seldom back subsidized housing, Jemison tells Axios.
• "I can't think of anything that we've done that as many different kinds of people are excited about," he says.

By the numbers: So far, the program has attracted seven applicants who want to convert office buildings into 307 apartments, of which 62 would be affordable units, Patrose says.

• Developers representing another 150 or so housing units are strongly considering the program.
• Jemison expects that "we'll probably be just under 500" units when the application deadline comes.

Meanwhile, office vacancy rates in downtown Boston were around 28% last July.

• "It is as pressing an issue as ever," Jemison says. "I don't think there's been significant change in the vacancy or in return to work."

The big picture: There are efforts to create programs like Boston's on a national scale.

• Congressional legislation would direct the Department of Housing and Urban Development to convert some government-owned properties into affordable rentals.
• Jemison and his team had "two lengthy conversations with the White House" about Boston's incentive program, which preceded the Biden administration releasing its guidance on the topic in October.
• Chicago and Pittsburgh have also launched programs similar to Boston's.

Yes, but: Even with municipal tax incentive programs, the conversion process is a bear — and the success rate is low.

• Obstacles include floor plans and infrastructure that stubbornly resist easy refurbishment — and the fact that it's often more profitable for a developer to manage an office building than rental apartments.
• Cities "are running into financing issues, stagnating rental markets and other challenges that are bottling up their efforts," per the Wall Street Journal.
• In 2022, developers created just 3,575 apartments in the U.S. through office conversions — less than 1% of apartments built that year, the Journal reports, citing an analysis by rental listing site RentCafe.

The bottom line: Programs like Boston's will bring more apartments to cities' downtowns — but won't likely make a big dent in the overall housing problem.