Real Estate, Insider Only

Op-ed: For office-to-residential conversions to happen, governments must listen to the experts

September 4, 2024
12:56 PM
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Recently, the federal government identified 22 properties in Ottawa (among 56 across the entire country) for conversion to affordable housing. Are the feds’ surplus buildings one of the cures to ailing housing affordability in our city? On paper, the case is compelling. Office-to-residential transformations can help accelerate housing supply, particularly in larger cities like Ottawa, where there’s also an opportunity to revitalize downtown cores that have seen a decline in activity due to people working from home. But not every building is ideal for conversion. A 2023 report by Avison Young noted that 286 properties in the nation’s capital meet two key criteria for “adaptive reuse” as rental apartments or other forms of housing:

Buildings built before 1990, which are less economical to upgrade to modern energy-efficiency and air-quality standards for office spaces;
Buildings with floor plates of less than 15,000 square feet, so that units have sufficient natural light.

So, while most of the buildings on the feds’ list will be of the right vintage, it’s not a sure thing they can be used as is. Of course, there are other considerations as well, such as specific conversion and construction costs, location and surrounding amenities. It’s also important to keep in mind that any developer contemplating an office conversion today has to deal with the same issues as any new construction, especially when it comes to construction costs and project financing. Ottawa’s new home market is being severely dampened by the current environment of higher interest rates. Office-to-residential conversions are not immune to such issues. But that doesn’t mean we shouldn’t take advantage of every opportunity we can for housing. Converting empty office space in some of the most central and desirable locations in the downtown core — government-owned or not — into quality homes represents a significant opportunity in Ottawa to realize more expedited housing that is sustainable and low-impact, to build amenity-rich, walkable communities, and to encourage built-in public transit use. We’ve already witnessed a few office buildings completely transformed into residential and more are in the pipeline. Between 2013 and 2022, Ottawa saw more than 700 new residential units from office-to-residential conversions and more than 900 units from non-residential to residential conversions, including conversion of places of worship and hotels, according to the city. We need to ramp up that production significantly and there are a few things that various levels of government can do to help:

The feds could defer tax on the purchase of a building until occupancy;
The province could revise requirements for a record-of-site condition to support office-to-residential conversions;
The City of Ottawa, while it made strides last year, could make the approval process even quicker, especially for changing the use of an existing building. For example, why would a wind study be necessary for a building that already exists?

I echo Shawn Hamilton’s recent plea for the federal government to please just get on with it! The Greater Ottawa Home Builders’ Association urges every level of government to work with the experts — listen to their issues and help them address impediments as they actually deliver this type of housing. It is critical that all three levels of government consider this point to be the beginning of their work to encourage and facilitate office-to-residential conversion, and not the end. Jason Burggraaf is the executive director of the Greater Ottawa Home Builders’ Association.