City looks to explore converting office space to affordable housing

Toronto councillor Brad Bradford is proposing that the city start to move forward exploring the possibility of converting unused downtown office space into other uses such as affordable housing.

The item was adopted at a recent planning and housing committee meeting and city council will vote on the item this month.

“The City of Toronto must remove barriers to the creation of new housing at every opportunity,” wrote Bradford, in a letter to the committee. “That includes making it easier – where possible – to convert older office buildings into housing. This will require that we ensure relief from guidelines and other rules that make it difficult to convert office floor plates into housing. This will also mean modernizing office replacement policies to unlock new housing supply and identify opportunities to secure affordable housing.”

In his proposal, Bradford noted that office occupancy rates in the downtown core are 50% less than before the pandemic, leaving several buildings unoccupied.

Bradford’s proposal is loosely based on Calgary’s Downtown Incentive Program, which aims to turn unused office space into daycares, community spaces, and residential units.

“Major urban centres, including Calgary, are already addressing this challenge through flexible conversion policies,” wrote Leona Savoie, chair of government relations for NAIOP Greater Toronto, a commercial real estate association, in a letter supporting Bradford’s proposal. “Calgary’s projects, as part of the City’s Downtown Plan, have been very successful and subject to high demand.”

Converting office buildings into residential spaces is logical on paper. Still, it comes with its problems that the city will have to solve before giving developers the go-ahead.

The switch would require new zoning allocations, a fair amount of construction work, and even then the feasibility is questionable, according to David Amborski, director of the Centre for Urban Research and Land Development at Toronto Metropolitan University.

“First the highest vacancies are in the older lower quality buildings B and C office space,” he said. “Also not all buildings lend themselves to cost effective conversion due to the wrong sized floor plates and other factors…..not enough external window surface etc.”

Amborski also points out that developers aren’t likely to take an interest in the expenses of converting office space into residential space without support from the city.

“This may require significant subsidies [and] if subsidies are to be used, by which government and how much will be required? Where will the money come from?” he said.

A campaign promise from the Liberals in the 2021 election touted the idea of spending $600 million for this purpose (converting office space into retail space). Still, that money has yet to be spread widely across Canada. Bradford asked the city council to follow up with the federal government to obtain grant money to make the proposed conversions appealing to developers.

“For many buildings the costs are prohibitive which is why in jurisdictions where the conversions are occurring such as the US and Calgary subsidies are often necessary to encourage the conversion,” Amborski says.

Whether or not Toronto can obtain some of the promised Liberal housing budget to bridge the gap between needed housing and developer incentives has yet to be seen.

The proposal will be considered by city council on Nov. 8.

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