Major Cities Encourage Office-to-Residental Conversions, but Not Without Hurdles
WINCHESTER EQUITIES
Major cities across the country, Phoenix included, are turning to office-to-residential conversions amidst a challenging post-pandemic office market. While this strategy holds promise in addressing the nation’s growing housing crisis, it presents significant challenges. The conversion process is both time-consuming and financially burdensome. To incentivize such conversions, cities are leveraging various financial mechanisms such as tax-increment financing, tax abatements, and tax waivers to alleviate costs. The viability of these conversions often relies on developing luxury apartments to ensure profitability for developers, which may contradict the goal of addressing housing affordability issues. Despite the theoretical merit of the idea, there are many hurdles to overcome before cities can make substantial progress with these projects.
