Burr & Forman Partner Russell Rutherford authored the article, “Will New Incentives Spark Office-to-Residential Conversions?,” which was published by Multi-Housing News on April 24, 2024.

In the article, Rutherford underscored the potential of office-to-residential conversions as a viable solution to tackle housing affordability and urban decay in numerous cities across the United States. In this discussion, Rutherford noted the pandemic’s effect of significantly altering the economic landscape and causing a steep drop in demand for commercial office space. This left many office buildings vacant, leading to higher vacancy rates, reduced foot traffic in city centers, and a decline in tax revenue. Conversely, Rutherford explained the demand for affordable housing remains high, with an estimated shortage of at least 7 million affordable housing units. Office-to-residential conversions could help address this gap, revitalizing urban areas and increasing the housing supply.

Rutherford went on to explain that while office-to-residential conversions have several obstacles to feasibility, including expensive renovations, regulatory issues, and determining the highest and best use of the property, several government programs could help make these projects profitable.

“The federal government has also released a guidebook explaining several new programs designed to promote these conversions, especially near public transit centers and/or where they would reduce emissions,” explained Rutherford. “Additional state and local programs may be available in certain locations, along with other longtime federal programs like LIHTC, opportunity zones, historic tax credits, etc. Developers interested in pursuing an office-to-residential conversion should contact their legal counsel and determine which incentives could facilitate the project.”

To view the full article, you may click here.