On Friday, October 27, the White House announced its Action to Create More Affordable Housing by Converting Commercial Properties to Residential Use, building upon its Housing Supply Action Plan released in 2022. The announcement includes new proposals and guidance for states, localities, and developers to repurpose underutilized commercial properties into affordable housing, and highlights existing tax credits and programs that can be leveraged to reduce costs and improve energy efficiency. These include:
- Releasing a Commercial to Residential Federal Resources Guidebook with information on the more than 20 federal programs that can be used to support commercial-to-residential conversions;
- New guidance from the Department of Transportation on lending programs to support transit-oriented development projects which increase affordable housing and reduce emissions;
- Updated guidelines on using the Community Development Block Grant (CDBG) fund to boost housing supply, including converting commercial properties to residential and mixed-use developments;
- Promoting the sale of surplus federal properties that could potentially be redeveloped for residential use;
- A Department of Energy Toolkit on how achieve zero emissions in conversions and using Inflation Reduction Act programs and credits to bring more capital to the conversion;
- Information from the Treasury Department on tax incentives for builders of multifamily housing.
In addition to these actions, the White House is working with states, localities, and the private sector to support this goal, collecting information on resources for commercial conversions, highlighting successful programs, and building policy proposals that can be adopted by localities interested in pursuing such conversions.
NAR has long supported commercial real estate adaptive reuse policies as one way to ease the affordable housing shortage and has discussed this with the White House and policymakers in the administration and Congress. The COVID-19 pandemic created new trends in commercial real estate usage, especially office and retail spaces. The increase in underutilized commercial real estate combined with the great need to develop more housing – especially affordable – in the country presents a unique opportunity, but costs and challenges associated with such projects have kept this solution from taking off. By drawing attention to this proposal and highlighting resources as well as collecting information and bringing together experts at the state and local level, the White House Action is an important step in promoting commercial to residential conversions. In addition to this, NAR supports H.R. 419, the Revitalizing Downtowns Act, which would provide a tax credit for the conversion of certain underutilized office buildings into affordable housing.