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Other cities are turning offices into housing. Why not Boston?

From Boston Business Journal, July 6, 2022

Since Covid-19’s arrival, there’s been a lot of talk about converting office buildings in downtown Boston into apartments or condos, to enliven a part of the city still missing many of the commuters who once walked and shopped along its sidewalks daily. In fact, office-to-residential conversions are a key plank of Mayor Michelle Wu's plan to revitalize downtown.

While such projects are moving forward in such cities as Philadelphia and Pittsburgh, there’s been little to no activity in Boston. The reality is, in a city as old and expensive as this one, with a life sciences industry gobbling up much of the real estate in sight, converting offices into housing is a tougher task than it is elsewhere.

“Conceptually, I see the benefits,” said Gregory Minott, managing principal at the Boston architecture firm DREAM Collaborative. “Architecturally, there are some challenges.”

Not conversion-friendly

By the numbers, it would seem there's plenty of opportunity in Boston. No major U.S. city has a higher percentage of its downtown square footage taken up by office space, according to a New York Times analysis of dozens of cities last year that used CoStar data.

Real estate firms look for a few things when considering remaking offices into housing, like a building's floor plates. If they're too large, some space will be unusable because it won’t get enough daylight. If they're too small, builders may not be able to fit enough units to make a conversion worthwhile. Many buildings that predate World War II don’t fit the bill. Shape matters, too. A rectangular footprint can be easier to work with.

Downtown Boston’s building stock is not as conversion-friendly as those of other cities. The design firm Gensler recently studied the office buildings in a large chunk of downtown Boston, to see how many would be viable for an office-to-residential conversion. Just 10 of 83, or 12%, scored high enough, said Todd Dundon, a principal at the firm. In other cities, that figure is more like 25% or 30%, he said.

Many downtown buildings have awkwardly sized floor plates or butt up against another building, according to Dundon, making it impossible to put in windows on one or more sides. Those few that rate highly enough, according to Gensler's criteria, tend to have been built in the 1970s or later, he said.

Other U.S. cities have outpaced Boston on conversions. In 2020 and 2021, almost 400 apartment units were created in converted buildings in Boston, according to data from research firm Yardi Matrix. By comparison, eight cities produced at least twice as many converted units in the same time frame. Philly more than quadrupled Boston’s total. (Those numbers include conversions from all types of buildings, like hotels, factories and retail stores.)

Labs, labs and pricey land

Of course, nowadays in Boston, landlords open to a conversion may be eyeing a potentially more lucrative makeover: office-to-lab.

“Everybody’s first thought is lab space,” said Charlie Adams, regional vice president for New England at the affordable housing developer Pennrose.

Those projects are easier to find: A one-time downtown WeWork site is now set to become lab space, and lab-conversion work has already taken place at a long-time office building in Winthrop Square. A life sciences real estate developer acquired a Summer Street office building for the same purpose earlier this year.



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The Wu administration is prioritizing the addition of downtown affordable housing, but the high cost of buying property in the neighborhood — in part a function of the lab craze — is making affordable-housing housing more difficult.

“It’s a great idea, and I think there’s some real potential there,” said Adams, whose firm is converting offices to housing in Hartford. “It all comes back to the land-acquisition costs.”

Class B, C potential

For all the factors weighing against residential conversions in downtown Boston, there are some market dynamics that could push at least some landlords in that direction.

Class B and C office buildings, considered to be of lower quality, are generally seen as the most likely candidates for residential conversions. In the first three months of 2022, Class A office rents in Boston were in line with pre-pandemic highs, but Class B rents were 11% lower than their previous peak, according to a Colliers report. Similarly, vacancy rates were a good deal higher in Class B than they were in Class A.

Class B landlords may be waiting for corporate return-to-office policies to drive workers downtown and rents back up, or for a lab developer to come knocking. But if those fail to materialize, some may eventually turn to housing.

“The more vacant space there is, the more pressure landlords are going to be under to figure out ways to monetize their buildings,” Colliers research director Jeff Myers said.

A vacant office building at 25-29 Beach St. in Chinatown is for sale, and the real estate firm representing the seller says most inquiries have been about remaking the property for a residential use.


A vacant office building at 25-29 Beach St. in Chinatown is for sale, and the real estate firm representing the seller says most inquiries have been about remaking the property for a residential use.


To encourage office-to-residential conversions, the Wu administration has designated a team in City Hall to help property owners with the transition. The Boston Planning and Development Agency is looking to hire a planner focused on downtown, including potential residential conversions, and plans to issue a solicitation for quotes later this summer for a study of the feasibility of the conversions, according to a BPDA spokesperson.

Other cities are putting up money to get more housing in their downtowns. Pittsburgh’s mayor has announced plans for a fund to help convert older offices to housing stock. Officials in Washington, D.C., proposed millions of dollars in tax abatements a year to spur downtown residential development. Real estate leaders say grants and tax incentives could help in Boston.

'It turned out to be a great project'

Locally, real estate professionals report interest in the conversions. Boston City Properties is marketing a vacant six-story office building on Beach Street in Chinatown for a sale price of $15 million. Most potential buyers so far have expressed a desire to turn the site to residential, according to Boston City Properties President Daniel Amodeo. Smaller units catering to Tufts Medical Center residents and local college students could make sense there, but “you’d definitely have to build up,” he said, referring to the potential for a skinny tower on the site. If more stories are not added, a lab conversion may make sense, Amodeo said.

There are success stories, too, if not many of them — including one in the heart of Downtown Crossing. Boston-based The Hamilton Co. decided to convert its office building at 8 Winter St. to residential in 2011, with office rents there failing to rise much in the wake of the Great Recession, CEO Jameson Brown said.

The conversion took nearly two years and required a gut renovation of the entire building. After a swoon during the height of the pandemic, all but one of the 48 units in the 45,600-square-foot building at the intersection of Summer, Winter and Washington streets is now occupied, Brown said.

“It turned out to be a great project,” he said.

Gensler’s Dundon contended that even a small number of office-to-residential makeovers downtown could have a big effect.

“If 10 buildings in that neighborhood were converted to residential, you’d all of the sudden have the beginnings of a 24-7 neighborhood,” Dundon said.


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