Panellists at Thursday’s Ottawa Real Estate Forum argued that office-to-residential conversions could play a key role in helping solve the city’s escalating housing crisis.
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As more developers look to transform empty downtown office towers into residential complexes, real estate executives are calling on governments to subsidize conversion projects they say often cost as much as building from scratch.
Panellists at Thursday’s Ottawa Real Estate Forum argued that office-to-residential conversions could play a key role in helping solve the city’s escalating housing crisis.
But they said the prohibitive cost of gutting offices and turning them into apartments is a major obstacle to getting more such projects off the ground. They want governments at all levels to take some of the financial burden off developers through measures such as subsidizing construction costs and waiving development fees.
“If you want (more rental housing construction) to truly happen, you’ve got to do something drastic,” Derek Noble, a partner at Ottawa-based Huntington Property Group, told an audience of industry insiders at the Ottawa Conference and Event Centre on Thursday afternoon.
Noble said the City of Ottawa “has an opportunity here to really take an enhanced leadership position” by encouraging developers to repurpose aging, less desirable office properties as apartments.
While Ottawa’s downtown office vacancy rate was officially about 14 per cent at the end of the third quarter, Noble estimated that the actual percentage of office space in the city’s core that sits empty or will be vacated once current leases expire is probably closer to 30 per cent.
“When you walk through downtown, it can be like a scene out of the Walking Dead,” he said, referring to the hit TV series about survivors of a zombie apocalypse. “It’s really, really hurting the city. We’re at an inflection point where we as a city have got to make some significant changes.”
Office-to-residential conversions have become a hot topic of late as commercial vacancy rates across North America spiked after workers fled offices during the pandemic and a shortage of rental accommodation has driven rent prices to record highs.
Advocates say conversions achieve dual goals by giving a much-needed boost to the rental housing inventory while at the same time getting rid of unwanted office real estate. Firms such as CLV Group and District Realty have already completed a number of conversions in the downtown core and several more developments are in the works.
But real estate experts say such projects are not for the faint of heart. It often takes more than a year to gain the necessary provincial and municipal permits and approvals to convert an office to residential use, and the process can be riddled with unforeseen complications that come with completely gutting and retrofitting decades-old commercial buildings to make them habitable.
