Declining office occupancy levels combined with a growing shortage of affordable residential housing has ignited renewed interest in converting office space to multifamily housing. This trend can be seen across the nation with CBRE reporting a 50% increase in conversions from 2022 compared to 2021. The Washington DC market has been no exception to this trend with Mayor Bowser unveiling an economic development strategy titled “DC’s Comeback Plan” with the hashtag #DistrictofComebacks on January 9th,2023. This strategy aims to revitalize DC over the span of four years including a target to add 15,000 new downtown residents. This plan expanded upon the affordable housing goals set in 2019 under the “Housing Framework for Equity and Growth” initiative, which aimed to create 36,000 new residential units by 2025 with at least 12,000 being affordable units. The initial impacts of these initiatives can be seen via the surge in conversions currently on the boards around the district. Bala is proud to be a part of the one of the largest of these conversions, 1825-1875 Connecticut Avenue, NW, by Post Brothers. This conversion project, includes over 1.1 million square feet and more than 500 new units.
While converting underperforming offices assets to multifamily housing could be viewed as a panacea for developers or owners, this type of project requires careful building evaluations, understanding of market conditions and potential regulatory hurdles for success. Infrastructure analysis of a potential property along with careful market examination are critical aspects of the early evaluation phase for a potential conversion. The analysis should include, at a minimum, architectural, structural, technology, mechanical, electrical, and plumbing systems review and evaluation to determine if the existing systems can be reused or replaced for successful conversion.