Why converting Boston's empty offices to homes is harder than it looks
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Illustration: Annelise Capossela/Axios
It's an uphill battle to transform Boston's vacant downtown office buildings into homes, but the Hub does have one advantage: its sky-high residential rents.
Why it matters: Filling empty offices with new downtown dwellers may look like killing two birds with one stone, but it's not nearly that easy.
- It takes sizable up-front investments to physically transform offices into suitable residences with individual units, plumbing, fire suppression, egress spots, kitchens and power.
- Spending millions to add hundreds of toilets, showers and new windows to meet residential building codes makes investors nervous when there's little guarantee of a return.
The big picture: Residential space is simply less profitable per square foot than commercial office space, meaning each converted building will generate less profit for owners and less tax revenue for the city.
Yes, but: Boston is considered one of the top metro areas where conversion could be feasible, according to a report by the National Bureau of Economic Research.
- Boston is among other high-cost cities like New York, San Francisco and Washington, D.C. where rents are so high it means developers can charge more and stand a better chance of making their money back on conversions.
That's why the city government is offering tax incentives to entice developers to convert empty buildings.
- Mayor Michelle Wu is offering a 75% discount on the residential tax bill for converted buildings, which could make the projects more profitable.
- The state wants other cities and towns to explore conversion. Gov. Maura Healey's office launched a $1 million program last week to help municipalities find candidates for conversion.
Threat level: Losing out on the residential taxes once a building converts leaves the city even more desperate for revenue.
- Economists are already warning that the decline of office space means a permanent downturn in city revenues that could lead to budget cuts.
The latest: The city approved Boston's first office-to-housing conversion project last week at a five-story building at the corner of Franklin and Batterymarch.
- Floors 2-5 will each have two studio apartments and one one-bedroom built, making 15 new units downtown.
Developers have plans in the works to convert a total of over 100,000 square feet of Boston offices in eight buildings into housing.