Halifax considers incentives for developers who convert old offices to apartments

In an effort to respond to its ongoing housing crunch, the city of Halifax is considering waysofencouragingdevelopers to convert old offices into new apartments.

Since reaching an agreement last fall to get money from the federal Housing Accelerator Fund, Halifax has begun to develop a pilotprogram that will use some of that money for grants to convert some downtown office buildings into housing.

"We don't have an office crisis; we have a housing crisis," said Coun.Waye Mason in an interview Friday."It seems like a smart thing to do to convert empty office spaces into residential that will be full as soon as it's done."

Mason said staff are still working out details, but he thought the grant program would take up "a couple of million" of the$79 million in federal housing money, and this wouldbe enough to fund "two or three" pilot conversions.

At least three buildings have been suggested as possible candidates for the pilot program:the former Centennial building on Hollis Street, the former RBC building on George Street, and the former BMO building on George Street.

Mason said the advantage to the city is that such projects could provide housing quickly, have a low impact on the streetscape, and be more environmentally friendly than tearing down old buildings and sending the waste to landfill.

The units wouldbe priced at market rates.

"We would of course love to see far more federal and provincial investment in affordable housing; we need thousands of affordable housing units," Mason said. "But we also need to see these conversions and because it can be so expensive to convert commercial, that might not be the right place to put the affordable housing."

Mason said a grant program could be required for "rapid change" in the downtown.

"If we want to see these buildings get turned into units that are occupied quickly, I think it's okay to incentivize that," he said.

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A recent report from the Canadian Urban Institute(CUI)a Toronto-based organization dedicated to knowledge on city-buildingcalled Halifax a "capital of conversions."

"Halifax really punches above its weight in terms of the amount of space that has been converted to housing," said Jennifer Barrett, the managing director of the CUI.

She attributes this to a growing demand for housing, a decliningdemand for offices, a lack of vacant land, policy changes to development requirements, and the city's "small scale" developers.

Several conversions are underway in Halifax, including those from Sidewalk Real Estate, a company whose announced projects include a former hotel on King Street in Dartmouth, the Centennial office building on Hollis Street, and the RBC building on Dartmouth's Portland Street.

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Other recent conversion projects include the Tramway building at the corner of Barrington and Sackville streets, and a former office building on Spring Garden Road opposite Park Lane mall.

"We've been told by designers that any building could be converted," Barrett said. "It's just the level of complexity and the result of what you would do in that conversion."

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The federal government is planning to free up underused office buildings so they can be converted into housing, but could that really help address the housing crisis? We break down where its been done before and the challenges these conversions pose.

For example, a large building with a lot of space on the inside is a difficult conversion because so much of the space lacks access to natural light. A rectangular building with windows on all sides is an easier conversion.

The age of plumbing and electrical systems is also important.

Barrett said the CUI has counted about 300 or 400 units in Halifax where conversion is already underway or complete, and it estimates there could be potential for up to 500 more.

Barrett said the CUI's research suggested there is potential across Canada for at least 20,000 converted units.

Downtown office vacancy rate at 18 per cent

In early April, the commercial real estate company CBRE released a report examining the Canadian office market during the first quarter of 2024.

One of the findings of the report was that many commercial tenants are leaving older downtown offices in favour of newer buildings.

"Conversions are beginning to gain traction in Halifax as the flight-to-quality has led to obsolete office towers being repurposed to vibrant residential buildings," the report stated.

According to the CBRE report, the overall vacancy rate in Halifax's office market was14.1 per cent, a number that accounts for both downtown and suburban areas. The report said within the downtown area the vacancy rate was higher at 18 per cent.

The national downtown office vacancy rate was 19.5%.