The High Cost of Transforming Boston's Vacant Offices into Residential Homes

In Boston's downtown, repurposing vacant office buildings into residential spaces appears advantageous due to the city's high residential rents. However, this transformation is far from simple.

The Challenge of Conversion

Converting offices into residences requires significant initial investments to ensure compliance with residential building standards. Investors are wary of spending millions on renovations without a guaranteed return, especially considering the lower profitability of residential space compared to commercial offices.

The Big Picture: Profitability and Tax Revenue

Residential space generates less profit per square foot compared to commercial office space. Consequently, converted buildings yield lower profits for owners and reduced tax revenue for the city.

Feasibility Amid High Costs

Despite challenges, Boston stands among top metro areas where conversion is feasible, alongside cities like New York, San Francisco, and Washington, D.C., due to high rents. To incentivize developers, the city offers tax breaks, including a substantial discount on residential tax bills proposed by Mayor Michelle Wu.

State Support and Economic Concerns

State initiatives, such as Gov. Maura Healey's $1 million program, aim to encourage other municipalities to explore conversion opportunities. However, the potential loss of residential taxes post-conversion poses a threat to the city's revenue, prompting concerns about budget cuts from economists.

Recent Developments

Boston recently approved its first office-to-housing conversion project, signaling progress in this endeavor. Developers have plans to convert over 100,000 square feet of office space in eight buildings into housing units, aiming to address the city's housing needs.