The White House has launched a multi-agency initiative aimed at repurposing vacant office buildings into affordable housing. The program leverages the availability of $35 billion in low-cost loans from the Transportation Department to support housing projects near transportation hubs. This effort aligns with the Biden administration’s clean-energy agenda.
The initiative also introduces additional funding sources, tax incentives, and offers guidance on accessing 20 federal programs to aid real-estate developers in the often complex and costly process of converting office spaces into housing.
Moreover, the federal government will compile a public list of its own buildings that could be sold to support development.
Transportation Secretary Pete Buttigieg emphasized the potential of downtowns and central business districts, which are frequently designed around public transit, to reduce both housing and transportation costs.
National office vacancies in the US have reached nearly 25%, significantly higher than the 8% vacancy rate in Europe, with certain cities like San Francisco experiencing even higher rates due to plummeting property values and mortgage loan defaults.
Despite the abundance of underutilized office buildings available at lower prices post-pandemic, financing for residential conversions has been limited, mainly due to rising interest rates since the Federal Reserve’s efforts to combat inflation. Uncertainty about office space needs and costs further complicates the situation.
With the federal government owning approximately 1,500 office buildings nationwide and leasing nearly 200 million square feet of additional space, the White House’s initiative offers a unique opportunity to revitalize obsolete buildings and increase the housing supply.
Developers participating in the program will have access to $10 billion allocated to the U.S. Department of Housing and Urban Development’s community development block-grant program.
Housing and Urban Development Deputy Secretary Adrianne Todman emphasized the importance of utilizing all available resources to address the nationwide housing shortage, which will, in turn, help stabilize rent levels and purchase costs.
New York City Mayor Eric Adams announced a similar plan in August. The initiative aims to produce as many as 20,000 new housing units.
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