Biden-Harris Admin Unveils Proposal for Commercial-to-Resi Conversions Amid 30-year-high Vacancy Rate

The Biden-Harris Administration has unveiled a series of initiatives aimed at addressing the issue of high commercial building vacancies across the country, while simultaneously tackling the shortage of affordable housing units. These comprehensive actions are set to have a significant impact on housing affordability, energy efficiency, and environmental sustainability.

Commercial vacancies and the affordable housing challenge: office and commercial vacancies have reached a 30-year-high, creating considerable strain on the commercial real estate sector and local economies. 

This nationwide phenomenon has led to a pressing need for new approaches to address these vacancies, particularly in urban downtowns and rural main streets. Simultaneously, the United States has been grappling with a chronic shortage of affordable housing units, which has contributed to rising rental costs and challenges for communities in reducing emissions, particularly from existing buildings and transportation.

The Housing Supply Action Plan: The recent actions announced by the Biden-Harris Administration build upon the principles outlined in the White House Housing Supply Action Plan. The plan focuses on lowering housing costs, increasing housing supply, promoting fair housing practices, and reducing energy costs to combat the climate crisis. 

These initiatives are in alignment with the broader economic agenda, known as Bidenomics, which aims to stimulate economic growth from the middle out and the bottom up. The primary objectives include lowering costs, expanding access to quality employment opportunities, and fostering the growth of a clean energy economy.

The Administration's comprehensive approach encompasses a range of actions, including:

1. Sparking investment through new federal funding and repurposing property: The Department of Transportation (DOT) is providing guidance to states, localities, and developers on how the Transportation Infrastructure Finance and Innovation Act (TIFIA) and Railroad Rehabilitation & Improvement Financing (RRIF) programs can be harnessed to finance housing development near transportation. 

2. Leveraging federal funding to encourage conversions: The White House is releasing a Commercial to Residential Federal Resources Guidebook that showcases over 20 federal programs across six federal agencies. These programs offer low-interest loans, loan guarantees, grants, and tax incentives to enhance the economic viability of conversion projects.

3. Working with states, localities, and the private sector to take action: The White House encourages states, localities, tribal, and territorial entities to identify all available public tools and land disposition opportunities to facilitate conversions. The National Association of Counties (NACo) is expanding its focus on supporting county capacity to convert commercial properties into residential use, with a particular emphasis on leveraging available federal programs and technical assistance efforts.

These initiatives mark a significant step towards addressing the challenges of commercial vacancies and the shortage of affordable housing, aligning with the Administration's broader goals of housing affordability, environmental sustainability, and economic growth. The comprehensive approach leverages federal programs, incentivizes conversions, and encourages collaboration with states, localities, and the private sector to drive meaningful change.