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Office to Residential Building Conversion Sector
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C.D. Howe and Place Bell would likely be bad candidates due to their sheer size, but a slim tower like 66 Slater or even Place de Ville A and B might be better suited. I really hope buildings along Sparks are seriously considered for conversion. |
In NYC, the conversion of a commercial building with a large floor plate into rental apartments was done by cutting out the core of the building to create an internal courtyard, so that apartments could have windows onto the atrium as well as the exterior.
Of course, rents in NYC are much higher than they are in Ottawa, so such a solution here might not be cost-effective. https://www.nytimes.com/interactive/...nversions.html https://static01.nytimes.com/newsgra...-180-5-600.png |
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But if NY does it, it's worth exploring in certain cases. |
Office to Residential Building Conversion Sector
Office conversion to housing costly, say developers
Nancy Lanthier Special to The Globe and Mail Published 4 hours ago | Updated 2 hours ago On paper, the case for converting office buildings to residential apartments is compelling. Two recent reports indicate that across Canada, scores of office buildings could be candidates for conversion. According to a report by the Canadian Urban Institute, which delves into conditions that enable conversions – such as building type, city policy and market viability – 130 buildings in 11 cities could be converted into 22,000 housing units. A broader approach by commercial brokerage Avison Young suggests about one-third of office buildings in major cities could be converted. This bounty includes every building with two “anchoring criteria” for conversion: small and old. Smaller floorplates work better for conversion because apartment units can flank windows without bowling-alley depth; older is better because newer glass towers can pose all manner of challenges, such as how to connect apartment walls to the glass exteriors. According to Avison Young’s research, Toronto has 923 such potential-conversion buildings; Calgary has 521; Ottawa, 286. Both reports lean into multi-faceted benefits of turning office buildings into housing. Cities could simultaneously solve two issues – rising office vacancy and growing demand for housing. In the process, they could limit demolition waste and revive downtowns. “Let’s take our blinders off and think about what the future could look like for Canadian cities,” says Sheila Botting, principal and president of Americas Professional Services at Avison Young. “It’s about the art of the possible.” On the ground, however, some of the few developers who’ve completed office building conversion are wary of how difficult and pricey the work can be. Oz Drewniak, president of Ottawa-based CLV Group Developments, has checked out more than a dozen potential building candidates in the last year and a half but each presented unsolvable problems. Most were too technically challenging or had too much occupancy, he says. Or the city’s sewer infrastructure wasn’t compatible for heavier residential use. On some sites, the environmental inspection or seismic assessment didn’t pan out. Three years ago, CLV launched the conversion of a vacant, 1970s 11-storey office building in the downtown area into 153 luxury rental suites. “We’ve learned a lot, so the next one should theoretically be easier. But it’s a challenge to find the right conditions out there,” says Mr. Drewniak. “I know of developers who have purchased empty buildings, but they’re sitting on them because they can’t figure it out. When you start looking at the cost, it’s very expensive. Everybody thinks, ‘oh, an existing building? That’s easy. You just throw some new residential units in it.’ But it’s not like that.” Mr. Drewniak says demolition and construction from scratch would have been easier – while the cost would have been “pretty much the same.” What was saved by reusing the structure was spent on “all the time and work just to get it ready for a new use.” For example, everything had to be ripped out, he says. “There wasn’t one pipe left.” Since offices use a higher electrical voltage, an all-new electrical system was required, and as for plumbing, a residential building requires magnitudes more load capacity for bathrooms, dishwashers and washing machines in every unit. The new systems also required 1,700 new holes drilled through eight-inch concrete. “It was a tremendous amount of drilling,” says Mr. Drewniak. “Weeks of drilling.” In Calgary, where downtown office vacancy of 32 per cent includes eight empty buildings, the expense, complexity and sheer work involved in office conversion has discouraged commercial property owners. In 2021, the city kick-started the process by offering financial incentives with the Downtown Development Incentive Program. “We realized that most building owners weren’t taking the initiative on their own to repurpose their vacant office towers,” a Calgary official recently explained to the Lincoln Institute of Land Policy. Now, 10 projects are in the works because developers can take advantage of city grants of $75 per square foot up to $15-million per project. The funds aim to cover about one-third of the cost of conversion. Before the grant, two conversions that had taken place (assisted by government funding); both cost roughly one-third more than ground-up construction. One of the new grant recipients, Aspen Properties, plans to convert 11 floors of an office building into 176 residential units. “We wouldn’t be doing this if it weren’t for the incentive program because the returns are not there otherwise; it wouldn’t make economic sense,” Aspen’s chief executive officer Greg Guatto told Calgary’s Building Owners and Managers Association. Peoplefirst Developments, owned by Calgary-based Astra Group Corp., was the first grant recipient. Maxim Olshevsky, the company’s chief executive officer, says the subsidy, along with expedited permitting that removed considerable carrying costs, made the firm’s eight-storey Cornerstone conversion viable. Yet even given that “crazy-fast” process, Mr. Olshevsky says the retrofit has taken substantial time. “This is not like new construction where you follow set plans,” he explains. “As you peel back layers of an old building, your plans change constantly. You know, you’d think the building’s columns would all be in the same place. But no,” he says. While scans depicted alignment, they were slightly off. Quick decisions about such unforeseen issues require a flexible team, he says. Larger architecture firms “may have a hard time adapting,” to speedy plan alterations. “You need to understand, going in, [that] you’ll know only 80 per cent of the building, and you’re lucky if you know that much.” Mr. Olshevsky’s experience and passion for saving buildings spurred the city to give Peoplefirst a second grant, which will be used to convert a heritage building purchased in February in a foreclosure sale. With the “very appealing” price and robust incentives, the developer can make it work, he says. “Everything really comes down to dollars and cents.” Conversion incentive options As Canada’s office vacancy tips toward 19 per cent, developers say making the office-to-residential conversion process easier should be at the top of government agendas. Canadian Urban Institute’s new study, The Case for Conversions, recommends the following ways governments can support conversions:
https://www.theglobeandmail.com/busi...ay-developers/ |
I made this post on the Downtown Canada thread.
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130 Slater - https://skyscraperpage.com/forum/sho...ghlight=office 169 Lisgar - https://skyscraperpage.com/forum/sho...ghlight=office 311 Cooper - https://skyscraperpage.com/forum/sho...ghlight=office 360 Laurier - https://skyscraperpage.com/forum/sho...ghlight=office 110 O'Connor - https://skyscraperpage.com/forum/sho...ghlight=office 170 Metcalfe - https://skyscraperpage.com/forum/sho...ghlight=office Not included is 1600 James Naismith Dr near Blair, preserving the car centric character of the area. - https://skyscraperpage.com/forum/sho...ghlight=office |
Cross-post.
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More incentives needed to spur office-to-residential conversions, real estate execs say
David Sali, OBJ October 20, 2023, 4:29 PM ET Panellists at Thursday’s Ottawa Real Estate Forum argued that office-to-residential conversions could play a key role in helping solve the city’s escalating housing crisis. As more developers look to transform empty downtown office towers into residential complexes, real estate executives are calling on governments to subsidize conversion projects they say often cost as much as building from scratch. Panellists at Thursday’s Ottawa Real Estate Forum argued that office-to-residential conversions could play a key role in helping solve the city’s escalating housing crisis. But they said the prohibitive cost of gutting offices and turning them into apartments is a major obstacle to getting more such projects off the ground. They want governments at all levels to take some of the financial burden off developers through measures such as subsidizing construction costs and waiving development fees. “If you want (more rental housing construction) to truly happen, you’ve got to do something drastic,” Derek Noble, a partner at Ottawa-based Huntington Property Group, told an audience of industry insiders at the Ottawa Conference and Event Centre on Thursday afternoon. Noble said the City of Ottawa “has an opportunity here to really take an enhanced leadership position” by encouraging developers to repurpose aging, less desirable office properties as apartments. While Ottawa’s downtown office vacancy rate was officially about 14 per cent at the end of the third quarter, Noble estimated that the actual percentage of office space in the city’s core that sits empty or will be vacated once current leases expire is probably closer to 30 per cent. “When you walk through downtown, it can be like a scene out of the Walking Dead,” he said, referring to the hit TV series about survivors of a zombie apocalypse. “It’s really, really hurting the city. We’re at an inflection point where we as a city have got to make some significant changes.” Office-to-residential conversions have become a hot topic of late as commercial vacancy rates across North America spiked after workers fled offices during the pandemic and a shortage of rental accommodation has driven rent prices to record highs. Advocates say conversions achieve dual goals by giving a much-needed boost to the rental housing inventory while at the same time getting rid of unwanted office real estate. Firms such as CLV Group and District Realty have already completed a number of conversions in the downtown core and several more developments are in the works. But real estate experts say such projects are not for the faint of heart. It often takes more than a year to gain the necessary provincial and municipal permits and approvals to convert an office to residential use, and the process can be riddled with unforeseen complications that come with completely gutting and retrofitting decades-old commercial buildings to make them habitable. Conversions are “extremely difficult to do,” Hanif Sachedina, managing director of investments at Toronto-based KingSett Capital, explained on Thursday, adding that in many cases it’s easier for developers to demolish an office tower and construct a brand-new building. “You really need the perfect set of circumstances for (conversions),” he said. Noble and Sachedina urged city officials to take a page out of Calgary’s book and consider creating an incentive program aimed at spurring the redevelopment of offices into housing units. The Alberta city launched its program in 2021, granting developers $75 per square foot of vacant office space that gets converted into residential. The initiative has proven so popular that Calgary announced this week it was pausing further grants because the program has hit its $153-million funding threshold. So far, 13 conversion projects have been approved and another four are under review, with as much as 2.3 million square feet of office space slated to be replaced with 2,300 new housing units. Sachedina said the price of converting an existing office into a residence is often “comparable” to constructing a whole new building, meaning some projects likely won’t go ahead unless developers can offset some of their costs through subsidies or other inducements. “I think that’s where you need the government to come and step up and help the developers convert some of these office buildings in the form of some sort of incentives as we’ve seen in Calgary,” he said. Noble also urged the city to look at other ways of helping builders reduce costs such as waiving development charges on certain types of housing projects. “That’s a policy that needs to be seriously examined,” he said. The city would likely need the backing of the provincial government to secure funding and set up an incentive program for conversions. In a separate Q&A at the real estate forum on Thursday, Mayor Mark Sutcliffe said the city is also negotiating with the province and the federal government for “what potentially could be a significant chunk of funding to support the building of affordable homes in Ottawa.” Sutcliffe said city hall is committed to cutting red tape in a bid to “shorten the timelines” for developers to get projects to market. “We’re trying to do everything we can to streamline processes at the city, to make approvals happen faster, to use city land in some cases to build affordable housing,” he told Erin Nagy, president of the Building Owners and Managers Association of Ottawa. “So there’s a lot of different pieces, and we’re doing everything we can to make things happen as quickly as possible.” https://obj.ca/more-incentives-neede...l-conversions/ |
City wants to make it easier to convert offices to housing
Lower fees, less paperwork and more flexible zoning rules are all on the table Arthur White-Crummey · CBC News Posted: Oct 24, 2023 4:00 AM EDT | Last Updated: 6 hours ago Ottawa's office vacancy rate has ballooned while its rental housing market remains tight, and city staff are looking to streamline building conversions to solve both problems at once. In a report to council's planning and housing committee, they're pitching ideas to save developers time and money on projects to transform office towers into apartments. That includes cutting fees, which can run as high as $54,015 for some steps in the application process. Staff are also recommending efforts to save paperwork, such as waiving transportation impact assessments for most conversions. The report also recommends more flexible zoning rules. Residential and office buildings don't always have the same standards on things like setbacks from other properties, so developers often have to head to committees and seek amendments when they want to change from one to the other. That can be a costly, time-consuming process. So staff are recommending automatic exemptions in cases where conversion projects don't add floors or additions. They also want to relax requirements for amenities like patios, gardens or balconies. City staff hope the ideas will help Ottawa meet its provincial targets to add 151,000 housing units by 2031. A plan to streamline conversions was initially promised as part of an action plan Ottawa submitted to apply for its share of the $4 billion federal Housing Accelerator Fund. The report doesn't make any explicit recommendations to invest city funds in private conversions. Staff looked at a Calgary incentive that provides up to $15 million to conversion projects, as part of an effort to revitalize that city's downtown. City of Ottawa staff say they can explore incentives further should councillors wish. Calgary's office vacancy rate is much higher, at more than 30 per cent. Ottawa's is somewhere between 12.5 and 15 per cent, depending on the source. That's still well above where it was before the pandemic. Meanwhile, the vacancy rate for residential rentals is barely over two per cent in Ottawa, according to the Canada Mortgage and Housing Corporation. The federal government is looking to divest itself of potentially millions of square feet in floor space in the National Capital Region, as it targets a 50 per cent reduction in its office holdings. It has already listed Ottawa properties it's hoping to sell, including the two L'Esplanade Laurier towers. https://www.cbc.ca/news/canada/ottaw...sion-1.7005826 |
Good to hear. Office conversions are relatively quick and save a lot of waste/new materials.
Developers have been calling for more incentives: https://obj.ca/more-incentives-neede...l-conversions/ |
City proposals to spur office-to-residential conversions fall short, developers say
David Sali, OBJ October 27, 2023 4:02 PM ET A city staff report calling for a more streamlined approval process and lower fees for office-to-residential conversions is “a step in the right direction” but doesn’t go far enough, prominent local developers say. With office vacancies soaring in the downtown core and rental housing in short supply, the document slated to go to the planning and housing committee next week is recommending a number of measures aimed at smoothing the path for builders to convert aging office towers into apartments. They include reducing application fees for procedures such as Official Plan amendments and other items that typically amount to tens of thousands of dollars per building – in some cases, as much as $54,000 just for complex site plan controls. Staff also suggest ways to cut red tape in the application process, including waiving items like transportation impact assessments and urban design review panel reports and broadening exemptions for developers to file records of site condition. In another move aimed at saving real estate firms time and money, the report recommends that conversions be exempt from zoning amendments for things like setbacks, as long as the size of the building envelope remains unchanged. CLV Group president Oz Drewniak, whose company has already completed one downtown office conversion project and has another in the works, praises city staff for their willingness to work with developers to ease the conversion process. While he’s on board with the changes proposed in the report, he is urging the city to go further in its push to encourage such projects. “I think it’s a step in the right direction, but it’s not far enough,” Drewniak says of the report. “I think council needs to take courage to be able to pull all the right levers that they have at their disposal – and I don’t think they’re pulling all the levers to their full capacity.” Even if all of the current application fees for conversions were dropped, Drewniak says, the total savings would be just a drop in the bucket for projects that often run well past $100 million in construction costs, or virtually as much as brand-new builds. “If you were to break that down in terms of rent (savings for tenants), we’re talking about pennies,” he says. “There’s no significant value to that.” Kelly Rhodenizer, vice-president of commercial and multi-family development at Regional Group, agrees. Estimating that construction costs have skyrocketed more than 50 per cent since before the pandemic, she says her firm has looked at transforming an office building that’s been vacant for five years into a residential complex, but concluded the margins on the project would be “borderline” at best. “Conversions are really tough from a constructability standpoint,” Rhodenizer says. “There are all sorts of structural issues, and when you pull everything down, you don’t know what’s there. (City staff) have tried to make the process easier from a planning approval standpoint, which I think is fantastic, but the cost of developing has gone up so much in the last couple of years, and my pro formas don’t work right now. “This new (report) doesn’t push me to pull the trigger to say yes.” If the city is serious about kickstarting more conversions, Drewniak says, it needs to take bolder steps, such as eliminating fees-in-lieu of parkland and implementing an incentive program similar to that of Calgary. Drewniak estimates that waiving parkland fees would save CLV Group as much as $1 million on its next conversion project at 360 Laurier Ave. W., or about $7,000 per unit. Rhodenizer also questions the need for parkland fees on buildings that were constructed decades ago and are being considered for conversions. “(The original developer) paid a parkland dedication fee already,” she says. “Why pay it again when it’s already been paid?” While noting that her ward has the lowest percentage of green space in the city, Somerset Coun. Ariel Troster says she’d consider supporting a move to waive or reduce parkland fees for conversions, as long as there was a provision to ensure that savings get passed on to tenants. “We have so little parkland in downtown Ottawa, and that fund is one of the places where we can revitalize our downtown,” Troster says. “It is about getting the balance right.” Meanwhile, developers argue an incentive program would have a “real, meaningful” impact on reducing costs for developers. Calgary launched its program in 2021, granting developers $75 per square foot of vacant office space that gets converted into residential. The initiative has proven so popular that the Alberta city announced earlier this month it was pausing the program because it has hit its $153-million funding threshold. So far, 13 conversion projects have been approved and another four are under review, with as much as 2.3 million square feet of office space slated to be replaced with 2,300 new housing units. Even the most straightforward of conversions are still expensive, Drewniak notes, meaning some projects won’t go ahead unless developers get additional financial support. He figures a program like Calgary’s could allow his firm to reduce rents by more than $300 per month. “These incentives are going to be increasingly important as the easy (conversions) are picked off,” he explains. “The problem is the break-even rent to support these conversions is quite high. “The only way these conversions are useful – and to be frank, almost any development – is at market rent. And to be able to provide an affordable component, it would be at a loss. No one’s going to build at a loss.” Rhodenizer attended a roundtable on conversions at last month’s Canadian Apartment Investment Conference in Toronto. She says panellists from Calgary raved about the city’s incentive policy. “It’s the right thing to do for the city and the community to bring liveliness to the downtown,” she says. “These incentives just basically pushed them over the edge so they could actually do it.” The city staff report touches on incentive programs, but stops short of recommending Ottawa adopt one. Staff argue that “over incentivizing” conversions could lower the supply of available office space below a “healthy” vacancy rate of 10 per cent, potentially driving up rents and displacing workers. Ottawa’s downtown vacancy rate currently sits around 14 per cent. If council were to explore financial incentives for conversions, the report says, it may be “prudent” to offer the program only when the vacancy rate is above 10 per cent. “Should council wish for staff to explore a fund, such a threshold could be explored,” the report says. Drewniak says he would be fine with placing limits on incentives. “Once there’s a healthy amount of vacancy reduction and (the market) becomes balanced, then that specific program can be pulled,” he says. “It doesn’t have to be a permanent thing.” Troster – whose ward includes nearly a dozen office buildings identified by the Canadian Urban Institute as potential candidates for conversions – says she’d be open to a program offering inducements to developers, provided there are clear guidelines for which buildings were eligible. “I think Calgary has shown us an interesting example of what can be done,” Troster says. “I think we can pilot some incentives on a case-by-case basis, but I think we need to be almost surgical in our precision.” The report will be tabled at the planning and housing committee meeting on Nov. 1. https://obj.ca/city-proposals-to-spu...evelopers-say/ |
Brutalism could help Ottawa convert offices to housing
Buildings in the post-war style may be strong candidates for office conversions Ben Andrews · CBC News Posted: Oct 28, 2023 4:00 AM EDT | Last Updated: 6 hours ago https://i.cbc.ca/1.6974444.169532676...eet-ottawa.jpg From the stark concrete of the National Arts Centre to the angular blocks of the public library's main branch, dozens of brutalist buildings are scattered throughout Ottawa's downtown. Beyond an iconic appearance, the polarizing style of post-war architecture may play a role in the city's efforts to convert vacant office buildings into housing, according to a new report. With office vacancy in downtown Ottawa hitting a record high, city staff are exploring ideas to save developers time and money on projects that convert empty offices into much-needed housing. And Ottawa may be primed to do just that. "We believe there's already a comfortable market and policy scenario that would allow conversions to begin to happen," said Jennifer Barrett, managing director of the Canadian Urban Institute, the non-profit research group that authored an April report on conversion potential in six major Canadian cities. Barrett said the pairing of high housing demand and widespread office vacancies places Ottawa in the "goldilocks" zone for office conversions. But exactly where those transformations take place may be influenced by the city's brutalist architecture. Brutalism emerged after the Second World War and reached prominence in the 1960s through 1970s, according to Sarah Gelbard, a postdoctoral fellow at the University of Ottawa. The style is known for its liberal use of concrete and other heavy materials, she added. In the post-war era, brutalist designs helped governments fulfill a "deep social need" by engaging in massive civic projects, creating arts and culture spaces and rapidly building housing, she said. Concrete can be manufactured out of local materials pretty much anywhere, and brutalism allowed countries to develop a singular national style despite mixing the concrete from whatever ingredients were on hand. In Soviet countries, for example, Gelbard said brutalism was often aesthetically "oppressive" and commonly used in housing complexes. In Canada, she said, brutalism tended toward a more "pragmatic and big civil expression." "I think that was a conscious choice to see that as a way that a Canadian style of architecture could start to emerge," she said. Early projects in Ottawa, such as the Department of National Defence building on Colonel By Drive, tended to embrace the stark concrete façade associated with the style. "It has a big mass to it — and it was a massive construction," Gelbard said. "It was a deep investment in the style." But while federal buildings were costly and highly experimental, she said, they also "paved the way" for private developers to re-implement the style faster and cheaper. By the late 1970s, she said, private development had begun to use many of the same materials but without the same attention to design. "It becomes a purely pragmatic, functional building," she said. "It becomes kind of standardized — and increasingly standardized." Today, the presence of brutalism in Ottawa is "pretty representative" of most mid-sized Canadian cities, according to Gelbard, but key federal buildings make its use "a little bit more iconic." While the style is often maligned for appearing cold or industrial, its combination of vintage design and the quirks that come with it make brutalist buildings appealing candidates for conversion. First, Barrett said, many reach an age where they need "a fair bit" of renovation. That "obsolescence" means the buildings are more likely to be available. Once they are, a buyer would discover the signature concrete façade makes it relatively easy to replace the inoperable windows of an office tower with the freely opening windows of an apartment complex. Attempting to do the same on a glass-fronted building, Barrett said, is much more challenging. As well, buildings from that period often follow a "tower and podium" design, with a narrow highrise set atop a wide base. Barrett said the narrow tower, which tends to have a rectangular footprint, allows light to penetrate from all sides — a prerequisite when designing living spaces. The shape also limits the amount of dead space in the centre of the building and "allows for a flexibility of unit design" often impossible in other office buildings, she said. The top two buildings in Ottawa most suitable for conversions are brutalist highrises, according to modelling by Gensler architects in the Canadian Urban Institute report. The report does not name the buildings. Although many Canadian cities are exploring office conversions, the presence of the federal government in Ottawa puts the city in a unique position. Public Services and Procurement Canada is looking to unload nine of its buildings across the region, meaning Ottawa's conversion prospects rely heavily on the whims of a single employer. "That creates a very unique scenario," Barrett said. "The decisions that get made by that employer, the federal government, will tip the scales in either direction." Christos Panagiotakos, senior vice-president and managing director at CBRE Canada, said converting a building away from its intended use is a complex process. "When you actually start tearing away the skin of these office buildings, you're finding a lot of different things," said Panagiotakos, who works with both developers and lenders. "They're very, very challenging, scary projects. There's just a lot of unknowns." The biggest risk for any conversion, he added, is whether or not a developer can efficiently retrofit the existing services within the building. "A wrong placement for a stairwell, or a wrong placement of a column can significantly affect how you're going to create your units," he said. "And that can significantly reduce the value of your end project." For many, the risk proves too high. Panagiotakos said most developers he works with contemplate conversions but rarely go through with it. Gelbard said she'd prefer for the federal government to convert its aging properties into offices instead of destroying them. "I'd rather see them repurposed than demolished," she said. https://www.cbc.ca/news/canada/ottaw...sion-1.6974474 |
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How Ottawa can help ease conversions of empty office buildings into housing
The city should tackle regulations and zoning laws. There are also unique technical challenges to overcome when repurposing buildings. Andrew Reeves Published Oct 31, 2023 • Last updated 17 hours ago • 3 minute read As an architect and business owner living and working in Ottawa, I am deeply troubled by the current and possible future state of our city. Currently, our city is suffering. The downtown is empty, businesses are closing, and the situation is about to get much worse. In the next 18 to 24 months, the federal government plans to sell or not renew leases on a significant number of properties in Ottawa. This will further increase vacancy rates and continue to hollow out our downtown. But the consequences go beyond empty buildings; the plan will also remove an important tax base for the city. This, in turn, will have an adverse impact on the hard-pressed remaining businesses that will need to absorb the tax shortfall. It’s more bad news for struggling businesses. Addressing the widespread and worsening downtown office vacancy rate is not a concern just for downtown communities but for all Ottawa residents. We all should care about what’s happening in our downtown because it has a profound impact on our city’s future. To get Ottawa back on track as a vibrant and engaging capital, we must act now. We have the privilege and opportunity to make decisions that will permanently change how we all live and interact with our city. We need to build our city with true intent. One key solution is the adaptive reuse of existing vacant office buildings to residences. This approach offers three principal benefits: 1. Sustainability: Adaptive reuse allows for significant carbon capture. It saves on the inputs of new materials and reduces overall construction waste. 2. Speed: Under the right circumstances, existing buildings can be converted in less time than it would take to construct a new building. 3. Cultural preservation: In adapting existing buildings, we can maintain the historical and cultural identity of our city by preserving its architectural heritage. We can preserve our city’s character and tell its story. However, there are significant challenges to the adaptive reuse of office buildings. These include regulatory barriers such as city regulations and zoning laws. Some regulations might not align with the unique needs and possibilities of repurposing old structures. There are also building-related technical challenges, such as integrating modern building systems into older structures, meeting new safety standards, and complying with accessibility requirements. Calgary serves as an example of successful downtown revitalization through the adaptive reuse of office buildings. It faced high office-vacancy rates after an energy sector downturn in 2014. By 2020, office vacancy rates were at 32 per cent. A coalition of developers, community groups and businesses collaborated with Calgary Economic Development to create a plan that brought people back downtown. Their approach included city grants for converted space, waiving the need for a development permit, and expediting the approval process. In just two years, they’ve approved 10 projects, creating housing units, including affordable housing. Ottawa should consider adopting similar recommendations to foster adaptive reuse: 1. Recognize conversions as existing buildings: This recognition should extend to site plan control, building permits, and development charges. Treating conversions differently from new builds will help streamline the process. 2. Support downtown communities: Recognize the intrinsic value in supporting downtown communities and reassess development charges. 3. Upgrading standards: Where safe to do so, eliminate the need to upgrade to new building standards. This will reduce costs and speed up the process. 4. Expedited approval process: Allocate specialized teams for conversion projects to expedite the city’s approval process. Time is money, and delays can be detrimental to the business cases in favour of adaptive-reuse 5. Diverse conversion options: Explore diverse conversion options beyond residential, including offices to hotels, schools, distribution centres, manufacturing facilities and hospitals. We’re at an inflection point in the development of our city’s future. As the nation’s capital, we have a responsibility not only to local residents but to all Canadians to make Ottawa vibrant, thriving and sustainable. Through the adaptive reuse of vacant office buildings we can revitalize the heart of our city, preserve our heritage, and secure a sustainable future. It’s time to act with intent and vision to shape the future of our beloved city. Andrew Reeves is Principal Architect and Founder of Linebox Studio. https://ottawacitizen.com/opinion/re...s-into-housing |
Ottawa wooing developers to turn offices into homes in ailing downtown
Coun. Ariel Troster says for the core to thrive, more people need to live there Elyse Skura · CBC News Posted: Nov 01, 2023 4:00 AM EDT | Last Updated: 20 minutes ago Turning empty workspaces into downtown housing could be a remedy for what ails Ottawa, but getting developers to take on the expensive projects may require more than what city staff have on the table. Somerset Coun. Ariel Troster understands both the rewards and the scope of the challenge. "It's no secret that downtown Ottawa has changed a lot. It's changed during the pandemic and I don't think we're ever going to see it go back to the way it was," Troster said. "The existing residents that live in downtown Ottawa, they want more services, they want a hardware store, they want more grocery stores. What we need for all of those things and for downtown to thrive is more people living in the core." Empty towers give a derelict appearance to the area, Troster said, but also represent an opportunity that some developers are already seizing. CLV Group and InterRent Real Estate Investment Trust purchased 473 Albert St. in 2019, tore out everything but the concrete skeleton and elevators and rebuilt the post-war era office tower as a luxury apartment building. Now, The Slayte's 158 units are nearly full. "You build as if you're building from scratch," said John Cosentino, a regional property manager with InterRent. "We're just thrilled and happy that we're doing our part." https://i.cbc.ca/1.7014443.169878707...conversion.jpg Six recommended changes going to the city's planning and housing committee Wednesday include waiving a fee and asking the province to make rule changes of its own, part of a plan to build 151,000 units by 2031. City staff cited the Canadian Urban Institute in a report making the case for a conversion program, saying a 10 per cent office vacancy rate and three per cent housing vacancy rate are "healthy." With higher office vacancy and lower housing vacancy, Ottawa's downtown is far from healthy. "It's just sad to drive around and see empty buildings not being used," said Cosentino, who suggested most of Ottawa's empty towers are roughly the same age have potential. https://i.cbc.ca/1.7014655.169879577...conversion.jpg Yet, they pose challenges as well. Cosentino described how having elevators and stairs at the Albert Street building's centre forced designers to be creative with unit layouts and how a mechanical room on the roof had to be raised a storey to allow for amenities like barbecues, fire pits and a year-round hot tub. In an interview from her home, Troster noted the more costly but less glamorous task of redoing all the plumbing. "What I did hear from housing developers that are interested in doing conversions of this nature is that they're very expensive and it is very tough to make them affordable," she said. "What I heard from the public is we need more affordable housing downtown." Merging those realities would be difficult, she said. The Slayte has 10 affordable units in the range of $1,500, with other suites costing as much as $3,600. Years before the pandemic turned business districts into ghost towns, the City of Calgary was already facing the challenge of revitalizing its downtown. Its incentive program, which provided millions of dollars of funding to developers, proved popular. Troster doesn't think that would fly in sprawling Ottawa. "We have a ton of infrastructure, thousands of kilometres of roads that we need to maintain," she said. "It's hard to find that sweet spot in terms of the value proposition … The bang for our buck is still investing in nonprofit, deeply affordable housing development." Troster also noted council's recent concerns about providing city dollars to developments that would go ahead with or without the city's financial support, pointing to the rejected tax break for the airport hotel. She said she's also contemplating further amendments to the city's proposal, raising the possibility of providing flexibility on fees to developers who convert buildings — if there's evidence the property has already made a payment to the city in lieu of creating new parkland. Troster said changes the city is proposing will speed up the development process and could save developers hundreds of thousands of dollars. Combining their work with initiatives from the provincial and federal governments, including a recently announced GST rebate, could prove a more sustainable financing method. Cosentino's top priority was removing bureaucratic obstacles. As councillors at city hall debate the proposal on Wednesday, construction crews just blocks away will be gutting an office tower that's destined to became his team's next residential project. https://www.cbc.ca/news/canada/ottaw...vert-1.7014389 |
City’s plans to speed office conversions pass committee, including two-year pilot project
Mia Jensen, OBJ November 2, 2023 3:36 PM ET A city committee has approved a plan to lower fees and streamline the approval process for turning vacant offices into residential units and directed staff to pilot a financial incentives program for office-to-residential conversions in the downtown core. The recommendations to the planning and housing committee, which were outlined in a city staff report last week, included reducing planning application fees for procedures such as Official Plan amendments and an amendment to provide flexibility for conversions where the building envelope remains unchanged. The committee also voted to streamline and reduce fees for the site plan control process for conversions where no new storeys or additions are proposed, a move the city says could save applicants as much as $30,000 per project. In a bid to make conversions more financially viable, the committee also approved a motion brought forward by Somerset Coun. Ariel Troster to reduce the amount of parkland fees developers pay on such projects in her downtown ward for the next two years. Office vacancies have soared in the city’s core in recent years, and housing remains in short supply downtown. Proponents of conversions say they can help solve both problems at once. “We’re kind of in a unique position in Somerset ward,” Troster said at the committee meeting on Wednesday. “Generally speaking, our office vacancy (rate) is 12 per cent; downtown it’s 14 per cent, and I would argue that the specific area in north Centretown that we’re really looking to micro-target is closer to 20 (per cent) or higher.” According to Troster, most of the vacancies are empty government buildings – some of which are derelict, leading to complaints from residents. There are also concerns that municipal services, including transit, have been significantly reduced because of the decrease in foot traffic. Converting empty offices into residential buildings, she said, could be key to addressing those issues. “There are huge advantages to office-to-residential conversions,” she said. While converting office buildings into residential units has been a popular proposed solution, developers are sometimes hesitant to take them on due to the complexity of the projects and high costs involved. “Some of the bigger developers in the city said they won’t touch any of these,” said Beacon Hill-Cyrville Coun. Tim Tierney. “They’re very, very expensive to convert. It’s not easy.” Orléans West-Innes Coun. Laura Dudas voted in favour of the recommendations in the report. “We know that this has been a trend in our downtown for much longer than the pandemic,” she said. “We’ve struggled with revitalizing areas like Spark Street and the ByWard Market. The key to that is residential; it’s bringing people into our core so they’re there 24-7.” She added, “There’s so much potential in our downtown core and what we don’t want is ghost buildings. I honestly don’t know how many of those buildings are going to be unlocked and turned into residential because of this report. But for us to do something, I’m more than welcoming of it.” Troster’s proposal would reduce the amount of cash-in lieu (CIL) of parkland payments for developments in Somerset ward. If council approves the plan, the CIL cap will be reduced to eight per cent for office-to-residential conversion projects on the condition that the project’s building permit is issued within six months of its site plan approval. Parkland CIL payments are made to the city by developers for the equivalent value of the amount of land that the city would otherwise require them to use for park purposes as part of the development. Under the current formula, a developer’s cash payout amounts to 25 per cent of the land’s value for highrises of 10 storeys or more. Reducing the amount developers have to pay is a “modest incentive,” said Troster. Some developers told OBJ last week they’d like to see parkland fees eliminated entirely, but Troster said that option wasn’t on the table. The pilot would be limited to Somerset ward and run for a period of two years to determine whether it’s effective in encouraging more conversion projects. “We have to have no illusions about this,” said Troster. “This is not affordable housing; in some cases, it’s even luxury houses. But as far as I’m concerned, people in a building is better than no people in a building and we’re looking at the general vitality of the downtown core.” Committee members were in favour of the motion but had some reservations. “I wasn’t sure about this, but I’m inclined to support the Troster motion,” said River Ward Coun. Riley Brockington. “It’s ward-specific, she’s well aware of the challenges of her ward, she’s willing to make this a pilot, and you have a healthy bank account. I do believe there may be some value to seeing what the results of a pilot would be.” Coun. Theresa Kavanaugh, who also supported the motion, said she’d like to see guidance in place to guarantee that the money developers save by reducing parkland fees results in reduced rental rates for tenants. “Any housing is good housing, but we need to, as a city, make sure we’re still focused on affordable housing.” Councillors also directed staff to meet with developers and other housing advocates to further explore the potential impact of additional financial incentives and report back to the committee in the first quarter of 2024. Also on Wednesday, the provincial government announced that it would remove the eight per cent provincial portion of the HST on “qualifying new purpose-built rental housing” in an effort to address the rental shortage in the province. Tierney said he hoped the committee’s decision, paired with the province’s announcement, would be a tipping point to get housing built more quickly in Ottawa. “We’ve got to find a way to get (units) built and get them built quick,” he said. “This announcement that just came out (from the province), between that and council, I think there’s got to be a good opportunity to collect some of those financials. I think there’s got to be some kind of benefit to reducing or eliminating any kind of CIL and that would be the need for speed.” The recommendations go to full council next Wednesday. https://obj.ca/citys-office-conversi...wo-year-pilot/ |
For office-to-residential conversions to happen, governments must listen to the experts
Jason Burggraaf, OBJ September 4, 2024 12:56 PM ET Recently, the federal government identified 22 properties in Ottawa (among 56 across the entire country) for conversion to affordable housing. Are the feds’ surplus buildings one of the cures to ailing housing affordability in our city? On paper, the case is compelling. Office-to-residential transformations can help accelerate housing supply, particularly in larger cities like Ottawa, where there’s also an opportunity to revitalize downtown cores that have seen a decline in activity due to people working from home. But not every building is ideal for conversion. A 2023 report by Avison Young noted that 286 properties in the nation’s capital meet two key criteria for “adaptive reuse” as rental apartments or other forms of housing:
So, while most of the buildings on the feds’ list will be of the right vintage, it’s not a sure thing they can be used as is. Of course, there are other considerations as well, such as specific conversion and construction costs, location and surrounding amenities. It’s also important to keep in mind that any developer contemplating an office conversion today has to deal with the same issues as any new construction, especially when it comes to construction costs and project financing. Ottawa’s new home market is being severely dampened by the current environment of higher interest rates and office-to-residential conversions are not immune to such issues. But that doesn’t mean we shouldn’t take advantage of every opportunity we can for housing. Converting empty office space in some of the most central and desirable locations in the downtown core — government-owned or not — into quality homes represents a significant opportunity in Ottawa to realize more expedited housing that is sustainable and low-impact, to build amenity-rich, walkable communities, and to encourage built-in public transit use. We’ve already witnessed a few office buildings completely transformed into residential and more are in the pipeline. Between 2013 and 2022, Ottawa saw more than 700 new residential units from office-to-residential conversions and more than 900 units from non-residential to residential conversions, including conversion of places of worship and hotels, according to the city. We need to ramp up that production significantly and there are a few things that various levels of government can do to help:
I echo Shawn Hamilton’s recent plea for the federal government to please just get on with it! The Greater Ottawa Home Builders’ Association urges every level of government to work with the experts — listen to their issues and help them address impediments as they actually deliver this type of housing. It is critical that all three levels of government consider this point to be the beginning of their work to encourage and facilitate office-to-residential conversion, and not the end. Jason Burggraaf is the executive director of the Greater Ottawa Home Builders’ Association. https://obj.ca/op-ed-for-office-conv...isten-experts/ |
It’s time to get creative, developers say, when it comes to office conversions
Mia Jensen, OBJ October 3, 2024 With an overabundance of empty office space across the city, local experts say it’s time for developers to get creative when it comes to conversion projects. On Wednesday, four real estate specialists shared their ideas and strategies at the Ottawa Real Estate Forum during a panel discussion on how to address underutilized office space. Panelists agreed that while office-to-residential conversions have garnered the most attention, the housing route isn’t the best solution for most office spaces. It’s a topic that’s top of mind for property owners with empty office space on their hands, according to Sachin Anand, senior director of acquisitions for Regional Group. “The class of the building is quite important. You’ll still get public and private interest, I think, in the class-As that have an (environmental, social, and governance) angle going forward. It’s the class-Bs and Cs that you’re going to have to sort of see,” Anand told the audience at the Shaw Centre. “Do you invest in your property and bring it up to a B-plus or A-minus (standard), or do you reimagine and readapt? Are you converting to residential because that’s the headline that everyone’s focused on, or are you thinking about your box in a different way?” There may be fewer empty buildings outside of the downtown core, but Anand said when those properties do crop up, there’s plenty of room for creativity. Anand said when he approaches a project, he likes to keep his options open. That includes considering asset classes he doesn’t typically operate in, and finding partners who can show him the ropes. Owners and developers, he said, should be asking themselves: “Why don’t I convert it to industrial, which might have a higher net effective (rent) and way cheaper leasing costs, from what I hear, and fit-up costs. Look at it a different way. Look at it outside the box. It could be a hotel. It could be a Japanese-style eight-storey shopping mall.” He added, “You have to look at the box a little differently and factor in your acquisition costs, your cost of investment to convert it to whatever you’ve got to do, and then what your net effective rates are going to be.” Michael Swan, assistant vice-president of property management and leasing at Morguard, said “the jury’s still out” on whether conversions will be profitable for building owners in the long run. “There’s not a lot of money, it’s thin,” he said. “When (guaranteed investment certificate) rates were at five per cent, it's almost like, why even take the risk for two to three years of cost if you’re not sure where they’re going to end up? You’re going to inherit a footprint that you might not get approved. You might inherit parking that you might not be able to get away with today. But the cost of the (demolition), the fit-up … Do I have to change the windows? Do I have to change the facade? “I haven’t seen any home runs or grand slams for anyone,” Swan added. Part of the reason for considering alternatives is because office-to-residential conversions are much more difficult to achieve than they might seem, said Richard Goldstein, vice-president of construction for KRP Properties. Detailed reviews of the building – including configuration, infrastructure, vertical transportation like elevators, and systems such as electrical and plumbing – account for a significant portion of the cost, Goldstein said. Such reviews often reveal that the building is not well-suited to be transformed from its original commercial use into housing. “In the pro forma, what is a bit different these days is special program funding,” he said. “(Investors) don’t just hand you the money you need to really take a look at things. You need to really look at things like energy efficiency, accessibility and affordability. Those are the three things that will allow you to apply to these special programs. You may need to put in some significant dollars.” Goldstein said the challenges of office conversions alongside the fact that, in his opinion, some form of hybrid work is here to stay should encourage developers and property owners to look at buildings in a different light. “(We should be) evaluating the potential asset for uses other than residential,” he said. “People need to open their minds.” That could mean moving away from residential or combining it with other uses. For example, Goldstein said his company is working on a residential conversion attached to a hotel and is looking for unique ways to make the most of the arrangement. “In terms of synergy, can our residential tenants have access to the hotel’s facilities? Yeah,” he said. “That’s a pretty good marketing play. We have a golf course out there. Can we provide incentives for tenants to play some golf? So it really goes to the creativity of the team who is responsible for looking at the asset, where it is, and then make the decision based on the pro forma to make sure the costs are in line and the whole thing makes sense.” He added that it doesn’t hurt to consider whether the building itself can be made into an attraction, something he said he’s seeing less of in recent years. “Maybe there’s another reason why you just want to do it, (such as) a complete sense of whimsy,” he said. “I just got back from Chicago, and you see things that make you say, ‘Why did they do it like that? Why would I cut that corner out when I could lease it?’ Well, because it looks cool and people will come. It’s an attraction.” https://obj.ca/get-creative-develope...ce-conversion/ |
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