The Biden Administration has announced a new initiative aimed at financing office conversions in an effort to combat the growing problem of high vacancy rates and housing affordability in markets large and small across the country.

The announcement comes as vacancy rates have skyrocketed to 30-year highs, according to the White House. Some cities like Washington, D.C. have seen rates as high as 50% in their CBD areas, prompting desperate appeals from politicians to enact wholesale changes to the built environment that’s backed up by funding from the federal level. Now, in unison with the Department of Housing and Urban Development (HUD) and Department of Transportation (DOT), the government has officially published its guidelines for obtaining available funding through the Transportation Infrastructure Finance and Innovation Act and Railroad Rehabilitation & Improvement Financing, and other programs.

The White House press release says: “Converting commercial real estate to housing also has unique financial obstacles. Office vacancies are not uniformly distributed across building age, size, quality, or geography, and vacancy statistics reflect unoccupied square footage, despite the buildings housing many tenants, each with their own lease terms. Commercial-to-residential conversions face the same zoning constraints that have led to longstanding housing shortages, including density restrictions, parking regulations, and strict use prescriptions.”

A report from the Brookings Institution in May suggested several “myths” remain in place before a critical mass of conversions reached. The share of conversion projects almost doubled despite the remaining need. Large cities, including New York and San Francisco, have begun their own initiatives. The White House is confident their guidance will help raise the bar for planners and developers, adding that new opportunities “will continue to arise” in the near future.

The plan joins previously announced efforts to address the homelessness epidemic and expedite the delivery of affordable housing. The White House noted HUD's commitment of $860,000 in grant funding to study office-to-residential conversions since the start of the pandemic. 

The full 54-page funding guidebook can be found here.