Tax Abatements Could Spur Adaptive Reuse in Washington, D.C.

Faced with commercial vacancies around 11 percent and the prospect of new office supply coming online soon, D.C. stakeholders are pushing for a bill that would provide incentives for conversions of office buildings into residential units.

2 minute read

January 18, 2018, 7:00 AM PST

By James Brasuell @CasualBrasuell


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Adaptive reuse—converting commercial buildings into residential uses—has spurred investment and the rebirth of downtown neighborhoods in cities like Los Angeles, Baltimore, and New York City. If new legislation under consideration by the Washington D.C. District Council is approved, the nation's capital could see a wave of conversions as well.

"To encourage conversions in the nation’s capital, where the office vacancy rate is around 11.4 percent, the district’s Council members are considering legislation to provide a tax abatement of up to $20 per square feet for 10 years, capped at $5 million a year," reports Eugene L. Meyer. The legislation has support from the DowntownDC and Golden Triangle business improvement districts.

The DowntownDC Business Improvement District released the "Downtown 2027: Vision for the Future" [pdf] report recently, which included an estimate that "new market-rate residences would be worth $600 a square foot, compared with empty office space valued at $450 a square foot." That additional value would more than pay for the cost of the tax abatements to jump start the conversions.

According to Meyer, the legislation isn't a sure thing. Mayor Muriel E. Bowser has expressed some reservations, namely questions about whether the conversations could generate revenue for affordable housing, and how much. 

One curious anecdote from the article reporting on the pending legislation must also be noted. Meyer quotes Jack Evans, a Democratic member of the Council and the bill’s sponsor, in the article using the term "Manhattanizing" as a positive. That might be a first.

Wednesday, January 17, 2018 in The New York Times

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