Federal Office Conversion Program Slow to Start

To date, no loans have closed through a federal program meant to spur office-to-residential conversions.

1 minute read

March 3, 2024, 11:00 AM PST

By Diana Ionescu @aworkoffiction


View from between tall white brick buildings in evening in downtown Los Angeles with modern office building across street.

Former office buildings in downtown Los Angeles, California have been converted to apartments. | vesperstock / Adobe Stock

Regulatory and financial barriers have prevented developers seeking to take advantage of the federal government’s office-to-residential conversion incentive program from closing on any loans, reports Kriston Capps in Bloomberg CityLab. The funds are being directed to office-to-housing projects near transit and funded via the U.S. Department of Transportation.

According to Capps, “Lengthy approvals, strict environmental reviews and tight credit criteria — standards designed with interstate rail projects in mind — have put this financing out of reach for many developers.” Although no loans have closed, three projects are currently in an underwriting phase.

The program requires a $1 million non-refundable deposit and a costly National Environmental Policy Act (NEPA) review, which developers argue is unnecessary for a building conversion. In some cases, projects that are located near certain types of transit don’t qualify under federal guidelines.

Thursday, February 29, 2024 in Bloomberg CityLab

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