Mar 6, 2023 - Real Estate

D.C.'s office-to-residential pivot is happening

D.C. office-to-residential conversions, by projected number of units
Data: DowntownDC BID, Golden Triangle BID. Map: Axios Visuals

D.C.’s office-to-residential pivot is underway with nearly 2,500 new apartments in the works.

Why it matters: The transformation of empty office buildings into homes is sorely needed to revitalize downtown in the work-from-home era while easing the overall housing crunch.

By the numbers: An Axios tally found that 383 units are currently under construction and another 2,105 units are part of upcoming projects.

  • Most conversions are concentrated downtown, but also span from north of Dupont Circle to Southwest.

The big picture: As part of its goal to attract 15,000 new residents to live downtown, D.C. is making conversions easier for developers. A 20-year tax break for such projects is expected to take effect this October for builders who commit to making 15% of units affordable.

Yes, but: There are barriers to converting offices. For one, if an office building is half full with long-term leases, the owner of the building can’t just kick out the tenants.

Zoom in: One of the largest projects envisions 600 to 650 units across from the Washington Hilton near Dupont Circle.

  • Michael Pestronk, co-founder of the developer Post Brothers, tells Axios that the plans are to convert two 1960s-era towers into apartments — some with up to four bedrooms. Part of an old parking garage would turn into a gym and other amenities. About 40 apartments will be affordable.

The intrigue: Several more projects still under wraps are expected to be announced over the coming year, including office-to-hotel conversions.

How it works

An office conversion project downtown.
Converting the former Peace Corps offices into apartments is slated to finish early next year. Photo: Paige Hopkins/Axios

The mechanics of transforming a dimly lit, cubicle-filled space into an inviting home can be complicated.

Gary Cohen, chair of the development firm Willco, is converting the former Peace Corps headquarters at 20th and L streets NW into the future Elle apartments. He shared some insight into the process — and its challenges.

  • ☀️ Each unit needs windows, so buildings with abundant natural light work best. Without that, developers will usually add a courtyard as a fix.
  • 💰 Older buildings that need to be modernized and brought up to code can be more expensive.
  • 🤝 One-tenant buildings are usually easiest because there’s only one lease to deal with. Multiple tenants mean a developer has to wait out all the leases or buy some tenants out.
  • ✏️ Designing a conversion can take longer than designing a project from the ground up. But conversions take less time start-to-finish and are generally cheaper, despite the need to add plumbing and other necessities.

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