Pittsburgh eyes $2 million for office-to-apartment conversions – GantNews.com
By Anthony Hennen | The central square
(The Center Square) – A pilot program in Pittsburgh would use federal funds to convert downtown office space into residential units for affordable housing.
The Pittsburgh City Council will consider legislation that would use $2.1 million in American Rescue Plan Act funds to make the downtown “a more vibrant and resilient neighborhood,” according to a Press release.
The funding is part of a $9 million effort by county and state officials to increase the number of affordable housing units in the city. The $2.1 million effort would boost the $3 million Commonwealth grant to the Urban Redevelopment Authority of Pittsburgh for affordable housing.
“The City of Pittsburgh is the heart of Allegheny County and the economic engine of western Pennsylvania,” said Sen. Wayne Fontana, D-Pittsburgh. “Pittsburgh’s downtown conversion program is a bold and innovative idea to ensure the city continues to drive economic prosperity, while ensuring equitable access to housing.”
Fontana, who is also a board member of the Pittsburgh Land Bank and Habitat for Humanity in the Pittsburgh area, criticized the General Assembly for not doing more to lower rents and make housing more affordable. in Pennsylvania, as did The Center Square. Previously reported.
Pittsburgh has an office vacancy rate of nearly 22% according Newmark, a real estate services company. That’s an increase of about 5 percentage points before the pandemic, although Newmark noted that the overall outlook for 2022 is “more optimistic” than in 2021. The increase in the vacancy rate is in line with large citiesthough Pittsburgh’s reliance on office space rather than downtown residential units is a contributing factor in its vacancy rate being much higher than Philadelphia’s (10.6%).
However, converting vacant office space into housing can be difficult.
Washington, D.C. has lead the nation in the transformation of offices into apartments, with nearly 1,100 conversions in 2020 and 2021. In 2019 working group reporthowever, warned of roadblocks.
“Barriers to market-driven office-to-housing conversions include: the higher profitability of office space compared to multi-family housing conversion; the distribution of vacancies over several buildings so that there are very few completely vacant office buildings; incompatible regulations and building codes for residential housing; and lack of experience with conversion construction, including uncertainty over conversion costs and logistics,” the report noted.
Downtown conversions are also often more expensive to buy than office buildings closer to residential areas. Conversions to DC during the 2010s were “more likely to occur outside of core employment areas,” the report summarizes.
Office conversions are not a panacea for the lack of affordable housing; they are a minor aid, according to the report. Downtown Pittsburgh could benefit from office-to-apartment conversions, but the city will need more housing built inside and outside of downtown to affect market rents.
“Each year there may be a few office buildings that have the right combination of financial and structural circumstances to make conversion into housing, including affordable units, possible. Such conversions would slightly increase the affordable housing stock,” the report notes. “However, such conversions would make a small, unpredictable contribution to solving the district’s affordable housing challenge.”