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Turning empty offices into housing is a popular idea. Experts say it’s easier said than done

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Office vacancy rates are high in several Canadian cities, even though many workers have returned to downtown towers and suburban business parks.

With housing rents on the rise and housing shortages across much of Canada, the idea of ​​turning empty offices into housing is very trendy.

There is even government funding to refurbish offices for residential use.

project in progress Calgary and Halifax; others are planned or discussed in Toronto, London, Ontario, and yellow knife.

But what is the key to making the office transformation work?

And to what extent will repurposing reduce surplus office space and create meaningful housing stock?

CBC News spoke to experts within the industry to find out.

View | Cities are working to transform empty office buildings into living spaces.

Cities are working to transform empty office buildings into living spaces

Cities across North America are repurposing old, empty office buildings and turning them into residential real estate.

problems and possibilities

A vacancy rate of 8-10% is considered healthy for the office market, according to commercial real estate firm CBRE. Nationwide office vacancy rate is 17% Some major urban centers are even higher, like Calgary at 30%, Edmonton at 22%, and London, Ontario at 22%.

While other companies have posted brighter numbers, older offices have struggled to sell for rent, leaving plenty of space that looks ripe for residential conversion.

However, converting an office into a condo or apartment is usually not a quick fix.

“In some cases[it’s]really easy,” said Stephen Painter, the Toronto-based director and architect of international architecture and planning firm Gensler.

“But if the building doesn’t work, it doesn’t work at all, it’s almost impossible.”

Buildings require a high score on the ‘Conversion Calculator’

If there’s one person who knows why office conversions work, it’s probably Paynter.

He and Gensler’s colleagues developed a conversion calculator that compares office towers and ideal homes.

A man in a cream sweater is standing at a tall desk in an open concept office and viewing a laptop computer screen.
Toronto architect Steven Painter, who works on remodeling projects, says some offices can easily be converted into residences, but most are next to impossible. (James Dunn/CBC)

It tallies things like whether the floor plan is suitable for an apartment or condo style unit, the size and number of windows, electrical, mechanical and plumbing needs, the location of elevators, parking, facades, etc.

Unless the office reaches 80 out of 100 or higher, we generally do not recommend changing.

Gensler has evaluated over 500 offices and expects that total to double soon after completing several large batches of evaluations in Toronto, New York and Washington DC.

So how many offices will make the cut?

About 25%, according to Paynter, but it varies a lot from city to city.

“Calgary, for example, has a lot of similar buildings built in the 1970s that are good candidates for repurposing. ,” says Paynter.

Conversion costs often don’t add up to make housing a viable option, says Raymond Wong, vice president of Altus Group, a Toronto-based commercial real estate advisory and data firm.

“If you consider all these variables – the layout of the space, the building itself, the expected costs – it might be easier to tear it down and start from scratch,” he said.

A man in a navy blazer stands in front of the window of his fifth-floor office with the skyline of downtown Toronto east of him in the background.
Raymond Wong of Toronto-based Altus Group says converting offices to residential units won’t solve the problem of excess office space by itself. (James Dunn/CBC)

Government buy-in is an important factor

Another important part of a successful conversion is the government, according to experts.

Some governments are converting their own surplus space into housing.

In 2021, the Federal Liberal Party has committed to: Invest $600 million to help developers transform office space into new rental homesHowever, the Canadian Mortgage and Housing Corporation (CMHC) said it could not provide an update on whether the money was spent.

Nova Scotia is committing $1.9 million to renovating a 55-year-old building in downtown Halifax.

Over the past two years, Calgary has spent $153 million to help building owners transform their offices into homes. Downtown Development Incentive Program.

Alberta’s vacancy rate has soared since 2014 as energy companies cut jobs when oil prices crashed, exacerbated by the pandemic.

According to CBRE data, Toronto has 12.9 million square feet of vacant office space, while smaller Calgary has an even higher 14 million square feet.

Applying Paynter’s 25% conversion rate estimate, Calgary could potentially build 3.5 million square feet of homes. Simply put, that equates to about 3,500 apartments of 1,000 square feet each.

Over the next 10 years, Calgary wants to cut 6 million square feet of office space and is giving developers $75 per square foot in grants to convert.

Calgary has so far approved five building conversions, one of which is owned by Maxim Olshevsky’s firm.

A man in a yellow reflective safety vest and white helmet stands inside a large open concept office space that is being renovated.
Maxim Olshevsky is one of five building owners who received multi-million dollar incentives from the City of Calgary to convert a downtown office tower into residential space. (Monty Kruger/CBC)

His company, Peoplefirst Developments, is building 112 two- and three-bedroom apartments in a ten-story office building.

The city is responsible for $7.8 million of the $38 million renovation.

Olshevsky’s company purchased the building from a foreclosure. “The city’s contribution really made this project possible,” he said of the conversion.

With construction costs of up to $400 per square foot, Wong said government support will be essential for many conversion projects.

“I think we need that type of partnership, not just zoning changes, for this to work.”

But he adds that conversion alone will not solve the problem of excessive office inventory in Calgary and other markets.

“It’s not going to be fixed in the next couple of years by moving offices here and there,” he said. “It will take a long time.”

With five conversion projects approved and nearly $50 million spent to date, Calgary has acquired approximately 650,000 square feet of office space from downtown. This is only his 10% of the target.

London, Ontario is considering a similar approach for downtown.

Adding affordable housing

Where government support is concerned, housing advocates say office conversion is necessary to include mixed and low-income housing.

Noha Sedky, urban planner at Cityspace, Vancouver, said:

“We have seen vacancy rates fall and average rents rise in every city in our country.”

A smiling woman with curly red hair stands in front of the stairs outside the building.
Noha Sedky, an urban planner in Vancouver, says if office renovations receive government support, they should be required to include mixed and low-income housing. (Lani Brun)

Sedky has been in affordable housing and land development for 20 years.

She also said that mixing housing in remodeling projects is good for the local labor pool because it means having “a variety of professional and service retail workers living in the communities where they work.” points out.

The Nova Scotia government is subsidizing rents 20% below market value for select units in a Halifax conversion project.

Calgary’s $153 million incentive program has no requirement for affordable housing.

However, the city donated $5.5 million to the proselytizing group. Towers to Housing for Vulnerable PeopleOlshevsky said his project includes units priced below market value.

Architect Steven Painter believes government support and community planning are key to a successful conversion.

He cites Detroit and Kansas City, Missouri as cities with successful office conversion programs before the pandemic.

With only 25% of offices in repurposing candidates, it may seem small, but “it’s actually billions of square feet across the United States and Canada,” he said, building many homes and You can keep construction materials away from landfills.

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