The New Residential Conversion Thread

[shmessy]

If vacancies stay high, office leases would just get cheaper and attract more tenants from the suburbs, no? Low-density suburban office park vacancies could be redeveloped into medium-density housing, improving land use efficiency. As opposed to office-to-resi conversion, which would keep relative density at parity.

And if tax revenue is a worry, at least a low-value office pays some reasonable quantity of taxes, while these office-to-resi conversions get a 75% abatement for 30 years, after which they would be paying the residential rate, which is like half of commercial in Boston. Seems more like a way to prop up revenues in the short term by not recognizing real losses and borrowing from future potential revenue.

From the emissions perspective, you can fit like 4-5x the office workers in an area that one person could live in, so unless commuting is less than 1/4 of someone's transportation emissions, I don't think it would be as impactful. I also have a feeling medium-density suburbs and a high-density centralized office core would do more to set Boston up for long-term high transit ridership than putting housing downtown.

You keep talking about office workers like that is a thing. Office worker days are still down and the advent of AI ain't gonna make that any better.

Skate to where the puck is going to be. Residential and services for those residents. That is the present and, increasingly, the future. The 1960's and the Mad Men series are a thing of the past.

And regarding the tax revenue - - all those new restaurants, dry cleaners, museums, theatres, hotels (the longer-living boomer retirees want to travel to places like Boston) and medical centers will more than make up for the tax abatements. A rising tide of economic revenue vs. preserving empty shells.

 

[shmessy]

Why does this need tax breaks then?

If it truly was vacant, poor office space that would not serve office tenants, but would work well as residential if converted, the building owners would already have an incentive to convert. Subsidizing it admits that it doesn't actually make sense to convert in current market conditions.

Because ALL construction is difficult since the pandemic - - material prices are through the roof - - you don't see any labs or offices being built either, do you?

Just getting ANYTHING built right now needs an extra push - - this just happens to help the overall civic urbanity more than the other private profit motives.

 

[ball_square]

If work from home is taking over,

I don't think WFH is taking over more than it already has. I'm not sure more AI usage would drive WFH. If anything, I can see the remote-friendly stuff like simple coding and PDF-slinging getting automated away, leading to a greater need for workers to be together in-person doing planning, whiteboarding, physical lab work, etc.

That said, having workers live in the CBD is a win regardless of whether or not they are remote.

 

[3decker]

RE: negative externalities of long-term vacancies, would a vacancy tax not also be an effective mechanism to discourage vacancies/encourage conversion?

 

[Justbuildit]

As the meme goes “land value tax fixes that”.

Yes those are also solutions to the issue. The question is time, opportunity cost, and the downside risk of bombed out vacant crumbling offices in the middle of the city.

Any new tax would also be subject to lawsuits, lobbying, lead in time etc etc. If the city was incentivizing these offices to be turned into slaughterhouses or paper mills I’d agree we should take another direction. But housing is good and it’s badly needed right now.

 

[shmessy]

RE: negative externalities of long-term vacancies, would a vacancy tax not also be an effective mechanism to discourage vacancies/encourage conversion?

There's already a free-market term for "vacancy tax". It's called "Lost revenue".

Instead of instituting another new tax, the solution would be to tighten up the real estate loss benefits in the tax code.

 

[JumboBuc]

I was always under the impression that dense, centralized clusters of office buildings like downtown Boston are one of the best ways to boost transit ridership by making a larger percentage of commutes viable on transit (I've also heard it cited as one of the reasons for Canadian cities' higher per capita riderships... ). Why do we want to ruin that by converting them into housing? And so much so that we want to subsidize it? Is having a downtown that isn't as dead outside of working hours more important than reducing emissions now?

Dense, centralized clusters of any buildings are one of the best ways to boost transit ridership by making a large percentage of commutes viable on transit. It's not office-specific density that does the trick, it's the density period. Dense residential + dense office is even better for transportation efficiency and emission reduction than just dense office alone is. But for a vast number of reasons it's easier to build dense office than dense residential, so that's why there are many more examples (especially in "the New World" of North America and Australia) of dense office towers surrounded by less-dense residential than there are of dense everything.

Residential conversions are a far superior use of older and outdated "office" buildings (even though many of these examples pre-date the current notion of what an "office building" really is) than their current vacant state. And in the long-run they'd probably be converted that way due to market forces, but it would take many years to get there due to the inherent stickiness and low liquidity of real estate markets, plus regulatory constraints of zoning and building code and property tax.* Every land use decision is a result of market forces + regulatory constraints, and the current incentive structure for these conversions is no different. Keep in mind that the current incentives alone aren't making these conversions happen; the conversions are the result of the current incentives aligning with underlying market forces.

*As John Maynard Keynes said: "In the long run we are all dead."

 

[stick n move]

11 Avenue De Lafayette​

“Convert the existing office floors of the Building to residential use, creating approximately 70 rental apartment units on Levels 1 through 5. The conversion is contemplated as an interior renovation of an existing structure: the Building footprint, height, and massing will remain unchanged, and no enlargement or extension of floor area is proposed. Existing ground-floor retail fronting on Essex Street will be preserved and remain in operation in accordance with the Office-to-Residential Conversion Program’s requirement to maintain ground-floor retail and other public uses.”

11 Avenue De Lafayette | Bostonplans.org

Development Projects and Planned Development Areas (PDAs) that the Development Review division is coordinating.

www.bostonplans.org

 

[Charlie_mta]

11 Avenue De Lafayette​

View attachment 72543

“Convert the existing office floors of the Building to residential use, creating approximately 70 rental apartment units on Levels 1 through 5. The conversion is contemplated as an interior renovation of an existing structure: the Building footprint, height, and massing will remain unchanged, and no enlargement or extension of floor area is proposed. Existing ground-floor retail fronting on Essex Street will be preserved and remain in operation in accordance with the Office-to-Residential Conversion Program’s requirement to maintain ground-floor retail and other public uses.”

11 Avenue De Lafayette | Bostonplans.org

Development Projects and Planned Development Areas (PDAs) that the Development Review division is coordinating.

www.bostonplans.org

Beautiful building.

 

[sm89]

I think the first floor on the Lafayette side should stay retail. It's a bit awkward to have ground level former storefronts be residential.

 

[DBM]

I think the first floor on the Lafayette side should stay retail. It's a bit awkward to have ground level former storefronts be residential.

I'm sorry, but that would be the essence of performative bulls**t. I started work in that area in 2009. In the past 17 years, there has been no retail at that address. I highly doubt there's been any retail there in the 21st century. So what's the point?

That area is a dead zone, for the obvious reason that there's the hulking Eversource fortress nearby consuming such a massive footprint. The pedestrian traffic flows there are laughably minimal compared to the Summer and Washington St. and Essex St. corridors nearby.

This view here, with the Eversource fortress on the left, is absolutely typical. Just two lone pedestrians along a corridor that's hundreds of yards.

Thus: given the utter lack of retail history there, stretching back decades, compounded by the nonexistent pedestrian traffic and the fact that reality will be locked-in for decades as long as Eversource is there... what would mandating retail there accomplish? Again, such a hollow, futile gesture.

Anyway, enough negativity; get this conversion done asap, like all the others, to bring 100s of new residents to Downtown and all the positives that confers!

 

[sm89]

I'm sorry, but that would be the essence of performative bulls**t. I started work in that area in 2009. In the past 17 years, there has been no retail at that address. I highly doubt there's been any retail there in the 21st century. So what's the point?

By that I meant it should stay commercial. It was formerly office space and was certainly built for some sort of commercial uses with direct access from the street. It's right in the middle of downtown. It doesn't need to be a coffee shop. Could be literally anything else instead of shades down all day.

 

[DBM]

By that I meant it should stay commercial. It was formerly office space and was certainly built for some sort of commercial uses with direct access from the street. It's right in the middle of downtown. It doesn't need to be a coffee shop. Could be literally anything else instead of shades down all day.

OK, good clarification. I will point out, though, that Road Scholar (formerly Elderhostel) has been the sole occupant of the premises for decades (they only sold the property back in spring 2021). So in fact the technical classification and character of the property for decades was... tax-exemption/educational... which is very much in keeping with a neighborhood that hosts so much of Emerson College's footprint, and a fair amount of Suffolk U's, for that matter.

That said, how about light manufacturing use? As this Globe piece from a while back persuasively (to me) argues, Downtown has been crying out for appropriate light manufacturing for ages now:

https://www.bostonglobe.com/2024/02/28/opinion/boston-empty-offices-manufacturing/

 

[jklo]

That said, how about light manufacturing use? As this Globe piece from a while back persuasively (to me) argues, Downtown has been crying out for appropriate light manufacturing for ages now:

Labor too expensive?

 

[JeffDowntown]

OK, good clarification. I will point out, though, that Road Scholar (formerly Elderhostel) has been the sole occupant of the premises for decades (they only sold the property back in spring 2021). So in fact the technical classification and character of the property for decades was... tax-exemption/educational... which is very much in keeping with a neighborhood that hosts so much of Emerson College's footprint, and a fair amount of Suffolk U's, for that matter.

That said, how about light manufacturing use? As this Globe piece from a while back persuasively (to me) argues, Downtown has been crying out for appropriate light manufacturing for ages now:

https://www.bostonglobe.com/2024/02/28/opinion/boston-empty-offices-manufacturing/

I don't know how you make sense out of light industrial uses for space in the urban core. You would have to be making an incredibly valuable product that needed something else only available in the urban core to be produced. Also even light manufacturing involves logistics, materials in, product out, which means frequent trucking accessing loading docks -- two things that don't play very well in downtown Boston. (Yes, offices have deliveries too, but manufacturing increases the frequency by at least an order of magnitude.)

Light industrial space typically rents for less than 1/2 the value of office space (in the more typical suburban environment). Owners (and lenders) would have to take a huge haircut to make light industrial viable. Also, the Globe article was specifically about large floor plate modern buildings, that are less suitable for residential conversion, not older, Class B space. (Even a bigger financial haircut involved there.)

I don't see how the math would work.

 

[bigpicture7]

...That said, how about light manufacturing use? As this Globe piece from a while back persuasively (to me) argues, Downtown has been crying out for appropriate light manufacturing for ages now:

https://www.bostonglobe.com/2024/02/28/opinion/boston-empty-offices-manufacturing/

I don't know how you make sense out of light industrial uses for space in the urban core. You would have to be making an incredibly valuable product that needed something else only available in the urban core to be produced. Also even light manufacturing involves logistics, materials in, product out, which means frequent trucking accessing loading docks -- two things that don't play very well in downtown Boston. (Yes, offices have deliveries too, but manufacturing increases the frequency by at least an order of magnitude.)

Light industrial space typically rents for less than 1/2 the value of office space (in the more typical suburban environment). Owners (and lenders) would have to take a huge haircut to make light industrial viable. Also, the Globe article was specifically about large floor plate modern buildings, that are less suitable for residential conversion, not older, Class B space. (Even a bigger financial haircut involved there.)

I don't see how the math would work.

I think what could work is more of the craftsmanship, studio, prototype shop sort of thing.

Is anyone familiar with this place?

Charlestown Commerce Center

That is maybe more on the heavier side than what I am referring to, but it's close. There are some workshops/studios in there, including a bookbinder and small company that builds guitars.

The issue with the place I cited is that it's in somewhat of a transit desert. The studios/workshops aspect of that facility located in/near the urban core would be amazing.

 

[HenryAlan]

I'm sorry, but that would be the essence of performative bulls**t. I started work in that area in 2009. In the past 17 years, there has been no retail at that address. I highly doubt there's been any retail there in the 21st century. So what's the point?

The point is well taken, but ask yourself if you'd want to live at ground level on this block? I don't think many would answer yes to that question, which means instead of empty retail space, it will be empty residential space. I'm not sure what the solution might be, but perhaps they can attract some sort of institutional presence like a museum or... something. Nobody is going to want to live on the first floor.

 

[Charlie_mta]

The point is well taken, but ask yourself if you'd want to live at ground level on this block? I don't think many would answer yes to that question, which means instead of empty retail space, it will be empty residential space. I'm not sure what the solution might be, but perhaps they can attract some sort of institutional presence like a museum or... something. Nobody is going to want to live on the first floor.

I see small businesses, not retail, on the ground floor of many 5 over 1s. That could also work here.