HUD creates research grant to analyze office-to-residential conversions

As municipalities wrestle with housing shortages, HUD is seeking more information on how such conversion projects have performed since 2020

The U.S. Department of Housing and Urban Development (HUD) this week announced a new notice of funding opportunity (NOFO) to examine the intricacies of converting office space into residential living units.

“The NOFO provides up to $860,000 to compile case studies of conversion projects that have taken place since the start of the pandemic,” HUD said in its announcement of the NOFO.

The studies will ideally “improve understanding of the financing limitations associated with conversions and the policy reforms and subsidies that can make projects more economically viable, propose metrics to evaluate conversions on housing affordability and other outcomes, and develop a guide for local leaders and development practitioners,” HUD added.

Proposals for the NOFO are due on October 12, 2023. Interested parties can apply through the U.S. government’s online grants portal.

HUD will aim to support researchers as local communities, counties and states seek to find new solutions to housing shortages according to Solomon Greene, principal deputy assistant secretary for policy development and research at HUD.

“There has been a surge in interest in office-to-residential conversions since the pandemic-induced shift to remote work and as many cities face a softening demand for office space and escalating demand for housing,” Greene said.

HUD also recently hosted a virtual event on the topic designed to illustrate the potential opportunities and challenges these conversions may bring, Greene added.

“Research highlighted at the event and supported by this NOFO will help the field to understand the financial and structural barriers associated with conversions and will provide key stakeholders with examples of how best to overcome them,” he said.

But these types of conversions are expensive, hard to finance, and often mired in red tape due to “prescriptive” zoning codes, environmental review processes and public meeting obligations.

“We ask far more of buildings today than decades ago, including that they be accessible, sustainable, hurricane- and earthquake-proof, that they deter flying birds and provide public spaces,” reads a story recently published by the New York Times. “Each new goal, while worthy, widens the disconnect between buildings constructed decades ago and what regulation requires today.”

The cumulative effect of such policies is that anyone seeking to convert an office building into residential units are often restricted from doing so by urban building codes, according to the reporting. Over the past century, New York City’s zoning codes have grown from 14 pages to more than 3,500.

“I have a name for the buildup of that stuff,” said Phil Wharton, a New York-based developer to the Times. “I call it the kludge.”

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