Biden Administration Announces Support for Financing Commercial to Residential Property Conversions

The Biden administration today revealed a suite of federal resources—including low-interest loans—to assist commercial to residential conversions that increase housing supply, revitalize urban downtowns, and cut climate pollution. (White House fact sheet; Bloomberg, Oct. 27).

Holistic Federal Strategy

  • Roundtable President and CEO, Jeffrey D. DeBoer said, “The pandemic’s indelible impact on where Americans live and work continues to reverberate through the real estate industry, which is at the center of this societal transition. The Roundtable supports innovative policy that reimagines the adaptive reuse of CRE, rejuvenates affordable housing and urban downtowns, and addresses the climate crisis. The guidance released by the White House today checks all these boxes—and bolsters our agenda to improve the health of our cities, local tax bases, and small businesses.”   
  • Among the actions announced today, conversion projects located near mass transit hubs would be eligible for low-interest financing under U.S. Department of Transportation programs. “TIFIA” and “RRIF” loans are pegged to US Treasuries at 5.03 percent interest (today’s rates).
  • Transit-oriented projects supported by TIFIA and RRIF financing do not require affordable housing units—although they can be “stacked” with projects supported by low-income housing tax credits and local laws may have independent inclusionary zoning mandates. (FAQs on project eligibility)
  • The White House announcement also directs the General Services Administration (GSA) to identify “surplus” federal properties that private developers may help to convert to housing.
  • A fact sheet summarizing the administration’s actions indicates that training workshops will be held this fall for real estate owners, developers, and lenders on how to use federal programs included in the White House’s new “Commercial to Residential Conversions” guidebook, which describes how 20 programs across six federal agencies can be used to support adaptive re-use projects.
  • The Administration’s guidebook also explains how mortgage insurance and grants from the Department of Housing and Urban Development (HUD) can leverage state, local, and private sector capital as layers in the capital stack to support adaptive reuse.

Adaptive Reuse a “Win-Win”

  • Real estate market conditions with high office vacancies “present[ ] an area of opportunity to increase housing supply while revitalizing Main Streets,” said National Economic Council Director Lael Brainerd. “It’s a win-win.” (POLITICOPro, Oct. 27) (WH Council of Economic Advisors blog post)
  • White House efforts to assist property conversions lands as national office vacancy stands at nearly 18 percent—with some major metro areas experiencing vacancies higher than one-fifth of their entire inventory—according to a report from  analytics firm Yardi Matrix released on Thursday. (Commercial Observer, Oct. 26)
  • Architectural firm Gensler released a report on Monday that estimates 25% of under-performing U.S. office properties are suitable candidates for conversion projects.

The initiative builds on the Biden Administration’s announcement last July to boost the nation’s housing supply. (Roundtable Weekly, July 28).  The Roundtable will continue to serve as a conduit between our members and the Biden Administration to help design impactful policies that can assist with office to residential conversions.

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Educational Institutions Increase Office Acquisitions; CRE Adaptive Reuse Rises

CBRE chart on CRE conversions

Recent CRE research shows an increasing number of colleges and universities are acquiring office buildings for adaptive reuse. Meanwhile, an overall surge in U.S. office-conversion projects scheduled for completion this year represents more than double the average annual pace. Federal, state and local conversion-incentive programs could play an important role going forward. (New York Times, Oct. 3 and CBRE, Rise in Office Conversions May Help to Reinvigorate Cities, Sept. 27)

Conversion Trends

  • Data from JLL cited in this week’s New York Times article shows dozens of U.S. institutions of higher education have bought office buildings since 2018—including 49 four-year private schools and 16 four-year public institutions—often for conversion to academic use.
  • Separately, CBRE research published Sept. 27 shows that a surge in office-conversion projects in major U.S. cities this year (nearly half of them in the multifamily sector) may help urban economies recover after the pandemic-induced shift to hybrid working. (Commercial Property Executive, Oct. 2 and GlobeSt, Sept. 29)
  • The CBRE report shows that 60 million square feet of office conversions are planned or in progress in 40 U.S. markets, which represents 1.4 percent of the nation’s office inventory. The report also notes that, despite a variety of government incentive programs, adaptive reuse is not a panacea for problems facing the U.S. office market, especially in a high interest rate environment.

Role of Policy

  • An Oct. 16 discussion during The Roundtable’s Fall Meeting in Washington, DC will address policy initiatives impacting building conversions, and other challenges facing CRE, during The Roundtable’s Fall Meeting in Washington, DC.
  • The Roundtable strongly supports policies that provide incentives for office-to-residential conversions. Last Dec, The Roundtable urged the Biden administration to support “legislation to facilitate the increased conversion of underutilized office and other commercial real estate to much-needed housing.” (RER letter to President Biden, Dec. 12, 2022 and Roundtable Weekly, Aug. 11, 2023)
  • This week, Roundtable Senior Vice President Chip Rodgers joined a group of business groups’ representatives to brief the staff of the House Financial Services Subcommittee on Financial Institutions and Monetary Policy, and the Subcommittee on Capital Markets.
  • The Oct. 2 briefing emphasized the need for policymakers to address dislocations in the office market by 1) incentivizing the conversion of outmoded office properties to residential use to help meet the nation’s housing needs; and 2) requiring federal government workers return to their offices.
  • Federal government programs will incentivize local jurisdictions to pursue office-to-residential conversions, according to CBRE. Federal incentives also aim to encourage financing mechanisms to build and preserve more housing, while reducing land-use and zoning restrictions for affordable and zero-emissions housing. (CBRE, Sept. 27)

A Real Estate Roundtable property conversions working group has worked with lawmakers for several months on draft legislation to create a tax credit for converting older commercial buildings to housing.

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House Democrats Urge Federal Regulators to Incentivize CRE Conversions

Rep. Jimmy Gomez (D-CA) at hearing

Rep. Jimmy Gomez (D-CA), above, and nine other House Democrats last week urged federal banking regulators to incentivize conversions of commercial real estate to other uses. Rep. Gomez previously introduced the Roundtable-supported Revitalizing Downtowns Act (H.R. 4759) in 2021 to encourage adaptive use of older buildings. Sen. Debbie Stabenow (D-MI) also introduced companion legislation in the Senate (S. 2511). (Rep. Gomez news release, July 31)

Federal Regulators & CRE Conversions

  • The recent letter to Fed Chairman Jerome Powell and other regulators stated that the congressional policymakers are concerned how the COVID-19 pandemic continues to exert a negative influence on markets and regional banks. “We are especially interested in the impact of this instability on the $6 trillion dollar market for retail and office space CRE, which has been unduly impacted by pandemic related disruptions,” the letter states.
  • The letter also noted, “It is essential that all arms of the federal government take prudent steps to limit the impact of a CRE market contraction, and innovate to encourage reuse of vacant commercial space as a potential source of housing.” (Rep. Gomez news release, July 31)

Legislation & Tax Credits 

Chicago office building into condominiums

White House Initiative The White House

  • The Roundtable on Dec. 12, 2022 urged the Biden administration to support “legislation to facilitate the increased conversion of underutilized office and other commercial real estate to much-needed housing.” (RER letter to President Biden, Dec. 12 andGlobeSt, Aug. 8)
  • Last month, the administration announced a new initiative that will establish a multi-agency working group to “develop and advance federal funding opportunities” for commercial-to-residential conversions that would help increase the supply of energy-efficient affordable housing. (Reuters and HousingWire, July 27 | Roundtable Weekly, July 28)

New CRE Conversion Study

  • new analysis from researchers at New York University and Columbia University explores the potential for renewable energy investment tax credits in the Inflation Reduction Act to help subsidize CRE adaptive use and green conversions. (National Bureau of Economic Research
  • The August study, Converting Brown Offices to Green Apartments, also notes the significant role that local zoning laws, permitting policies, and building codes could play in encouraging CRE conversions. The authors conclude that about 11% of commercial office buildings in the 105 largest cities are candidates for conversion, and that an estimated 400,000 new apartment units could be created. (Axios, Aug. 8)

property conversions working group created by The Real Estate Roundtable’s Tax Policy Advisory Committee will continue to respond to legislative proposals affecting potential property conversion activities. 

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Office-to-Residential Conversions Part of New Biden Plan to Increase Energy-Efficient, Affordable Housing Supply

The White House

The Biden administration announced a new initiative yesterday to increase the energy-efficient affordable housing supply, including a multi-agency working group to “develop and advance federal funding opportunities” for commercial-to-residential reuse. (Reuters and HousingWire, July 27)

Support for Office Conversions

  • White House Chief Domestic Policy Adviser Neera Tanden said, “With high rates of commercial vacancies across the country, we see a tremendous opportunity for conversions to residential housing.” (PoliticoPro, July 27)
  • An administration statement listed a variety of new initiatives aimed at lowering housing costs and boosting supply that include:
    • Promoting commercial-to-residential conversion opportunities, particularly for affordable and zero emissions housing; 
    • Expanding financing for affordable, energy efficient and resilient housing; and,
    •  Reducing barriers to build housing such as restrictive and costly land use and zoning rules. 

Agency Actions 

HUD building in Washington, DC

  • HUD: Yesterday’s announcement included opportunities for localities that develop high-density zoning rules to apply for grants from the Department of Housing and Urban Development (HUD) under a new “Pro-Housing” Program. This follows HUD’s release on Tuesday of new funds for research and policy guidance on economically viable office-to-residential conversions, with applications due by October 12. (HUD Press Release)
  • DOT: A similar grant program run by the Department of Transportation (DOT), “Reconnecting Communities and Neighborhoods,” will provide funds for planning and construction projects (primarily in disadvantaged communities) for transit-oriented affordable housing.
  • EPA: The White House also announced that the $27 billion Greenhouse Gas Reduction Fund, created by the Inflation Reduction Act (IRA) and administered by the U.S. Environmental Protection Agency (EPA), will be available for energy efficiency building retrofits and commercial-to-residential conversions.
  • GSA: The White House statement advised that the General Services Administration (GSA) will launch an effort to identify under-utilized and surplus assets in the federal real estate portfolio that present the “best opportunities” for public-private partnership, commercial-to-residential projects.
  • DOE: Yesterday, the Department of Energy (DOE) released program and legal documents for $8.8 billion in rebates authorized by the IRA. State-level energy agencies will dole out federal rebates that can be used for high-efficiency appliances and electrification equipment installed in single-family homes and multifamily units, including measures in adaptive reuse projects

This week’s announcements follow commitments made by the Biden-Harris administration in its Housing Supply Action Plan, released in May 2022. That month, The Real Estate Roundtable and 18 other real estate organizations urged Congress to work with the Biden administration, housing providers, lenders, and other stakeholders to pursue bipartisan solutions to increase the nation’s supply of housing. (Coalition letter, May 23 and Roundtable Weekly, May 22) 

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CRE “Adaptive Reuse” Report Shows Increase; Industry Coalition Urges Expansion of Conversion Incentive

RentCafe chart of Top Conversion Building Types

The conversion of former offices to apartments reached an all-time high in the last two years—40% of all existing building repurposing projects—reflecting a rapid increase in “adaptive reuse” throughout the nation, according to a Nov. 7 RentCafe analysis of Yardi Matrix data. (Download pdf or see website)

Conversion Trend

  • Large cities such as Philadelphia, Cleveland, and Pittsburgh have embraced conversion projects to repurpose old buildings and unused office spaces, according to the report. (BusinessInsider, Nov. 8)
  • Offices are the largest share of all building types undergoing conversion, representing 28% of future apartments, followed by hotels (22%) and factories (16 %).
  • Los Angeles ranks first in the nation with the most converted apartments in the first half of 2022. (RentCafe analysis of Yardi Matrix data.)

Conversion Development Obstacles

Conversion difficult prospect

  • As building occupancy levels remain depressed due to lingering remote working arrangements, cities such as New York, Los Angeles and Chicago are proposing plans to relax building rules and create tax incentives for property owners undertake conversions. (Axios, Sept. 28)
  • A Roundtable-led coalition of 16 national real estate organizations on Oct. 12 recommended certain enhancements and expansions to a 20 percent tax credit for qualified property conversion expenditures, which is part of the Revitalizing Downtowns Act (S. 2511H.R. 4759).  The recommendations include expanding the category of properties eligible for the credit to various types of commercial buildings such as shopping centers and hotels.
  • The coalition letter also emphasized the significant obstacles that the industry continues to face with conversion projects. Obstacles that frequently arise include property acquisition, permitting, development review, toxic contamination, property age and code conformance, and a “not in my backyard” (NIMBY) sentiment. Additionally, the structural elements of an existing structure—columns, beams, floor layouts and size, ceiling height, etc.—often pose hurdles that add cost and extra delays to an otherwise desirable repurposing of a building. (GlobeSt, Oct. 12 and Roundtable Weekly, Oct. 14)

The letter to the bill’s sponsors, Sen. Debbie Stabenow (D-MI) and Rep. Jimmy Gomez (D-CA), offers several recommendations to help ensure the legislation drives additional economic investment and brings down housing costs.

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Real Estate Industry Urges Lawmakers to Consider Tax Incentive for Property Conversions

CRE with green trees

A Roundtable-led coalition of 16 national real estate organizations on Oct. 12 recommended certain enhancements and expansions to the Revitalizing Downtowns Act (S. 2511, H.R. 4759). The bill was introduced by Sen. Debbie Stabenow (D-MI) and Rep. Jimmy Gomez (D-CA) to encourage the conversion of older buildings into new uses. (Coalition letter

Qualified Property Conversions Credit 

  • The coalition noted that many buildings are being reimagined and repurposed to address a severe shortage of housing and meet other post-pandemic business needs. Where appropriate, property conversions can be a cost-effective means to develop new housing supply, create jobs, and generate critical sources of local property tax revenue while saving energy and reinvigorating communities.

  • The Revitalizing Downtowns Act would provide a 20 percent tax credit for qualified property conversion expenditures. The credit is modeled on the historic rehabilitation tax credit and could be used for office buildings that are at least 25 years old at the time of the conversion.

  • An office-to-residential conversion project may qualify for the credit if the project provides at least 20 percent affordable housing—or is subject to an alternative affordable housing arrangement under state or local policy, ordinance, or agreement. 

Real Estate Industry Recommendations 


  • The recommendations include:
    • (a) expanding the category of properties eligible for the credit to include other types of commercial buildings, such as shopping centers and hotels;
    • (b) extending the incentive to real estate investment trusts (REITs); and
    • (c) reducing the conversion expenditure requirement from 100 percent of the building’s basis to 50 percent—along with half-a-dozen other suggestions.

  • The coalition letter is the work product of a property conversions working group created by The Real Estate Roundtable’s Tax Policy Advisory Committee. The working group has reviewed and considered the challenges and impediments confronting potential property conversion activities.  

Recent media articles on property conversions include “Cities push to convert deserted office buildings into housing” (Axios, Sept.  28) and “Multifamily Developers Turn Some Dead Office Space into Apartments” (, Oct. 4). 

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