White House opens $45 billion in federal funds to developers to convert offices to homes
White House opens $45 billion in federal funds to developers to convert offices to homes
The White House is opening up $45 billion in federal funds to developers looking to turn big-city office buildings into homes.
The White House kicked off a multiagency push on Friday to help finance real-estate developers convert more office buildings in big cities emptied by the pandemic into affordable housing, taking aim at the nation’s housing crisis.
The initiative looks to harness an existing $35 billion in low-cost loans already available through the Transportation Department to fund housing developments near transit hubs, folding it into the Biden administration’s clean energy push.
It also opens up additional funding sources and tax incentives, offering a new guidebook to 20 different federal programs that can be tapped by developers and offers technical assistance in what can end up being tricky and expensive conversions.
A third peg of the program will see the federal government draw up a public list of buildings it owns that could be made available for sale to help bolster development.
Next up, your employer charging you $900 a month for your cubicle and bed.
22“Home from Work”
12I don't think the businesses currently owning these have any interest in running a residential apartment company. The idea is likely that companies that have large empty office buildings would sell them to companies that would refit them as residential, and then likely sell them again to companies that already have expertise in running large residential management companies.
3Weird how we're using tax dollars for someone else's investments, lol.*
I guess it would make sense if the buildings were publicly owned, but instead they're going to be owned by someone who charges as much rent as possible while expending as few resources as possible to do it.
*not weird at all. The one time democrats and republicans unite on anything is when we're funneling money to the ruling class.
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This is great news. It's glad that the government is helping with something that everyone agrees should happen. Take these empty businesses and make them homes. It's about time and I'm glad it's happening
21It's awful news.
It would be great news if the housing was owned by the public.
This is just funneling public money to private businesses so the private businesses can continue to profit off the public.
$45 billion so landlords can charge people rent. Great. So they get the handout for free, and the rent for free. Just free money all around, lol.
But taxpayers and tenants will be paying.
4I can't see how it would be owned by the public. ~80% of this is loan money offered so it does have to be paid back with interest. The properties in question would all be owned by private companies who were using them as office space. So your suggestion means the government would have to purchase all of the property. Costing them 100%. This way they likely spend 15% (assuming a 5% interest made on those loans) and get the incentive going. Add in the fact that you then need to maintain run and rebuild all the housing directly from the public funds after that and you will never get everything situated/passed in our current government. The government gets what it wants. The private companies get what they wanted. The people get more work from home jobs, less traffic, and lowered emissions with the possibility of housing prices not rising as fast do to supply is being increased. (Doubt)
Overall it isn't the worst use of our taxes
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It's good to convert them, but I really can't see why this needs government funding.
3Incentives tend to make things happen, especially when they would be unlikely to happen without incentives. They often work in "kickstarting" or "bootstrapping" a new market that then continues without incentives.
An excellent example is solar panel incentives. In the early adoption days, these allowed people to afford expensive solar panels, which helped solar panels manufacturing develop into a mature buisnesses that iterated and improved on solar panel design to the point where they are inexpensive enough to no longer need as many or any incentives, which have started to go away. Meanwhile, solar panel manufacturung and install are huge new industries with massive growth that help solve many issues with our nation, including climate change, energy independence, power grid resilience, on and on.
Incentives that turn office building into housing will help solve homelessness, strength worker rights with work for home policies, revitalize downtown buisnesses and neighborhoods, amdreduce emissions/traffic from less people driving. Lots of wins there that clearly are excellent things to incentive.
4
Except for the top comment already conflating this with "company store" style debt slavery.
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I mean, every time I bring up this possibility, experts on this site tell me how office high rises don't have enough plumbing or electricity and would need a major refit and that blowing up the building and rebuilding from the ground up might be less expensive than the refit.
13That's correct. Now imagine the U.S. government's perfect corporation-boosting answer to that: give billions away to developers to just go ahead and do it anyway. Anyone opposed to it gets painted as anti-housing, most people's attention span isn't long enough to read the details of why it's like lighting money on fire, and as long as corporations get richer the parties in power are guaranteed another few years in charge.
13I knew there was a catch
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It's totally possible to refit office high rises for residential use. But it is a major refit (though much cheaper than rebuilding the house) and you will get rather bad flats in the end.
Double floors, double ceilings and easy-to-move plasterboard walls are great for offices, since they can change up the layout of the office extremely fast.
But in residential buildings this translates to walls that are too weak to hang stuff on them and bad sound proofing.
Not impossible to live there, but considerably worse than a high rise that was built for residential use.
This in turn doesn't make perfect financial sense, since the owner of such a building is now not renting out expensive office spaces in good locations, but instead low-standard cheap flats.
It can be done, but it's not something an office building owner would want to do without additional financial incentives, and then only if there is no chance that they can rent out the space as offices.
9It can be done, but it's not something an office building owner would want to do without additional financial incentives
It's even possible to do without those incentives. Or at least it was before interest rates spiked.
I know of 2 buildings in my city that were converted in the 2016-2019 timeframe.
Both had to have the interiors gutted and new interior walls built, new plumbing on the floors added, new curtain wall glass, upgraded elevators, new HVAC and upgraded electrical.
It was a multi-year project (so no revenue and plenty of expense for a couple of years), but both have full residential occupancy now, where in the several previous years they were around 50% office occupancy.
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That said, given current borrowing costs, going without revenue for a couple of years during construction is not going to appeal to many owners unless there is some other incentives.
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rebuilding from the ground up might be less expensive than the refit.
I've heard something similar, but I'm wondering if that isn't the full story. What if it would be cheaper to tear down office skyscrapers and rebuild them as residential...but it would take an extra 10 years to do that. Their statement would be truthful, but missing the larger goal of making affordable housing in desirable locations available faster.
6It's a major redo to get plumbing, stove/dryer outlets, and individual heating control to each unit, but it's not blow up the building difficult. Conversions are a big decision, but not difficult. (You also usually lack a balcony, which is a not so small loss for tenants.)
3No balcony is pretty common in new apartment/townhouse builds now.
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Middle management in absolute shambles at this news
12Wait, we're giving handouts to landlords so they can charge us rent?
What the fuck is wrong with america, lol.
11The real estate industry currently out lobbies the oil industry by a factor of 10 right now. That's what's wrong with america.
10How many people do you know who say "I don't care about politics.'?
If everyone who paid taxes voted we wouldn't have these problems.
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Let’s ballpark numbers. Downtown Denver is about $3/sqft per month for commercial rentals. Assume 4x 2,500 (roughly a small 3-2 house) square foot apartments on each floor, those will be $7,500/month at the going rate.
Things are bad in housing prices, but not that bad. Downtown is mostly commercial and high end living because of the cost premium. They’re freaking out because they spent $$$$ on buildings that won’t have a return any more. Imagine getting only $2k a month for those apartments when you expected $7.5k from tenants, that’s a $22k reduction per floor.
How are you supposed to buy cocaine and yachtsHow can you expect the numbers to work for building owners?4How can you expect the numbers to work for building owners?
Because it's either take those numbers or get even less? I'm sure the commercial property owners would prefer to just keep renting out at commercial rates and make more $$$ (plus I'm sure commercial tenants are less hassle than residents overall), but right now a lot of these buildings are sitting empty.
Better to make something than nothing
6Yes, but what if… just hear me out… the poors have to return to work and nothing changes?
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They’re freaking out because they spent $$$$ on buildings that won’t have a return any more.
Exactly this. And they're using the government to bail them out, as usual.
2Agree fully but maybe its to target some of these areas that are more commercial zoned parts of suburban areas where maybe the commercial pricing wasn't as premium? I can think of a few areas near me where there are like a dozen commercial buildings all right next to each other vacant, and they're right down the street from suburban single family houses, some apartments, and shopping. Several of those commercial buildings have been vacant for 3-5 years. Maybe if the owners take a bath on the property for 5 years, their return calculus changes a bit.
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I wonder if Amazon will allow the push for coming back into the office because of this. I doubt it. They'll just take the money and run.
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1It should be illegal to force people to relocate like that. It's not the military. The only option is to do it or quit, and employers know that it's going to cause lots of people to quit so they end up not having to fire them and pay unemployment benefits or severance. It's a scummy loophole that needs to be plugged with new worker protection laws.
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Office buildings are hard to remodel, because they were not plumbed for that many individual ovens, stoves, and bathrooms.
0Office buildings are designed to be remodeled. Just about every time a new company comes in they remodel the space to fit their needs. This includes adding/removing kitchens, bathrooms, server rooms, lighting, HVAC etc...
Sure, you're going to have to run a whole lot more plumbing for residential, maybe you even need a larger connection to the sewer but you're already doing a full tear out, these things are inconsequential.
Somehow I'm supposed to believe it's cheaper to build out from scratch rather than repurpose an existing structure? It makes no sense.
4Are you suggesting we only do what is easy?
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But why male models?
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