The effort to revitalize the downtown lands front and center this week as the Boston Planning and Development Agency gears up to release a PLAN: Downtown report that keys partially on an initiative by Mayor Michelle Wu to incentive conversion of commercial property to residential use.
Last month, Wu’s office announced the establishment of a program aimed at solving the area’s housing shortage by offering tax breaks upwards of 75% to building owners that will convert vacant downtown office spaces into residential ones. BPDA officials said that the tax cut for a period up to 29 years “could provide a strong incentive to encourage conversion.”
The agency’s PLAN: Downtown team has a significant role in the conversion program, as well as in preserving the city’s cultural heritage, enhancing overall housing access and promoting mixed-use development. The team’s next meeting will be held virtually on Wednesday to go over some of the key enhancement and revitalization efforts that will be included in a comprehensive draft report set to be released Friday.
Public comments on the report will be open for team consideration until Sept. 15 and a public meeting to discuss the report will also be held virtually on Aug. 24 at 6 p.m.
The approximate 20% rate of vacant office space in Boston is the highest the area has seen since the 2007-2008 financial crisis, according to a 2023 second-quarter Colliers report onthe city. More than 36M square feet of office space was available at the end of the second quarter, according to the analysis.
A city spokesperson, in an email to the Herald, said, “The purpose is not to offset all private investment for office property acquisition. It is to help close the gap for developers who would consider converting but don’t have financial feasibility.”
An analysis cited by the spokesperson suggests that roughly 10% of the existing office space in Boston is feasible for residential conversion.
Wu, in her July announcement of the conversion program, said the initiative “will help us take advantage of the opportunity we have to rethink Downtown as a space where people from all over come together to collaborate, create, live, and play.”
Gary Kerr, the managing director of U.S. east development for Greystar, lauded the city for recognizing the stark need for increased and accessible housing in Boston during a phone interview Sunday with the Herald.
“This is a real change from some of the policies related to housing over the last couple of years,” Kerr said. “It signifies that there is a need, a problem and also says [the city] is prepared to try new and creative ways to solve the problem.”
The number of office buildings not being fully utilized and occupied, he said, has resulted in more ground-floor retailers but creates a public safety issue people may not realize when discussing the topic of vacant buildings.
“Some people are recognizing their livelihoods are at risk and our city streets may not be as safe as they used to be because they don’t have people there reporting things,” Kerr said. “There really is this overarching need for more housing, which is one of the real positives from that program.”
The city is only offering a chance at permitting conversions for a short time, requiring applications by June 2024 and a deadline of October 2025 to start construction.
The initiative, while interesting to Kerr, is not “fully effective.”
“It’s not entirely clear what the criteria to be accepted are,” Kerr said. “There’s still a lot that needs to be decided. There’s a need today, I think there’s people who’d be interested in jumping into this today, I just don’t think there’s enough meat on the bone there yet to really dive in with.”
The approach Boston and other municipalities have to take, Kerr said, is that of trial and error. The current state of real estate, he said, plays a prominent factor as well.
“The real estate world is dealing with probably the most stringent economic conditions since 2008,” Kerr said. “It’s hard to know which of these policies is going to work because they can’t be viewed in isolation.”
A city spokesperson said the pressing financial issues facing the nation are not unique challenges Boston must overcome and touted the work Wu’s administration has done, including a streamlined review process for developments and rezoning work.
“Right now, between construction costs, high interest rates and reluctance of lenders in the current economic climate, it is hard to get a multi-family project to be financially feasible in most parts of the country,” the spokesperson said. “This is not unique to Boston.”
While similar efforts to combat housing shortages have been explored in New York, San Francisco and Washington D.C., Kerr said, Boston needs to focus on the smart type of housing development that suits the city’s needs best.
“I don’t think we should be able to build anything you want anywhere in this city,” he said. “This isn’t Houston. But I do think when it comes to housing, we need to set some broader parameters. We need to build more housing, we need to build student housing, we need to build anything where people can live as quickly as possible.”
Boston Chief of Housing Sheila Dillon said the program “aligns with this administration’s dedication to creating accessible and equitable housing in every neighborhood, strengthening our small businesses and commercial centers.”
City officials said more details on the program, along with the official beginning of the submission dates for applications will be available sometime this fall.
