Biden Administration’s Strategy to Convert Commercial Properties into Residential Units to Enhance Affordability—Will it Succeed?

Last month, the Biden-Harris administration unveiled a series of actions designed to facilitate the conversion of vacant office properties for residential use. As reported by CBRE, in Q2 2015 the nationwide office vacancy rate reached 18.2%–an all-time high since CBRE first started keeping records 30 years ago.

U.S. is experiencing a severe lack of available housing. As of Q4 2020, Freddie Mac estimates a shortfall of 3.8 million units needed to meet housing demand and keep the vacancy rate within acceptable limits; and National Low Income Housing Coalition also estimates 7.3 million affordable rental properties unavailable to extremely low income renters across the nation.

Supporting office conversions with federal funding and guidance may seem like the perfect solution; however, due to logistical and financial considerations it would only make sense if converted many commercial properties to residential use. Even with funding in place to enable office repurposing efforts like this one however, only small amounts would actually supply enough housing units to address national needs. While new funding, low cost financing, guidance or guidance might assist redeveloping some properties that would otherwise sit empty; further action are likely required in order to meaningfully increase supply of housing stock.