There is no doubt that the city of Boston is currently in the midst of a housing crisis. In the Boston Foundation’s annual report, the Greater Boston area received a failing grade in the year of 2022. The report cites confounding factors of economic growth and rising housing prices with the bottom line that middle and lower-income families will be struggling in the coming years to find affordable housing options if new policies are not adopted.
The current issues will no doubt have significant impacts on immigrant populations within Boston, which have long occupied historic and culturally vibrant communities within the city. For many Bostonians residing in the city’s historic Chinatown neighborhood, increasing housing costs and continued industrial development in the city and surrounding areas have led to long-time residents moving out. According to Angie Liou, executive director of Boston’s Asian Community Development Corporation, these residents primarily move out to surrounding suburban neighborhoods such as Malden and Quincy.
For some of these displaced residents, this means losing the cultural community and home they have built over generations. Additionally, this loss of residents has significant impacts on the diversity of Boston’s neighborhoods and the culture they bring to the experience of living in the city. It is clear that policy changes need to be put in place to prevent further impacts of housing shortage.
The heart of the issue seems to rest on a lack of balance between a focus on economic development and housing security. The Boston Foundation reported a growth of 275,000 jobs, but notes only 108,000 new homes being provided during that same period of time to supplement the economic boom. The resulting lack of housing availability has resulted in significant rising housing costs. According to the Greater Boston Association of Realtors, the median home price in Boston just crossed $900,000 this summer, which is nearly a 3% increase in cost over the course of a year.
One potential solution may lie in the conversion of seldomly used office space in downtown Boston into affordable housing units. According to a report for the 2nd Quarter of 2023 done by Colliers, office space vacancy is rising to a whopping 19.7% with nearly 36 million square feet of space available. They note this statistic to be a record high vacancy for office space in Boston. More than 8 million square feet of this unused space resides in downtown Boston, which is currently in the epicenter of the ongoing housing crisis. Much of this increased vacancy can be attributed to the COVID-19 pandemic, with a large influx of workers beginning to work from home as opposed to within an office space.
To solve both issues of unused building space as well as a lack of affordable housing options, the city of Boston is working on a plan to convert between these two spaces. A new program, the Downtown Office to Residential Conversion Pilot Program, aims to provide tax incentives to ease the transition of unused office space into housing units. In an interview with GBH, Arthur Jemison, the director of the Boston Planning and Development Agency notes that the incentive program would reduce tax obligations for developers by approximately 75%. In order to recoup the costs to the city, the proposed plan will implement a 2% charge for future sales of the renovated properties. He additionally notes that the tax incentive program will set aside 20% of housing as affordable housing, with 17% of units being offered at a 60% median income rate. In addition to providing increased housing options for Boston residents, the program seeks to provide increased foot traffic for local Boston businesses by integrating more residential communities within downtown Boston.
This new tax incentive comes on the heels of several similar programs across the country. For example, New York City mayor Eric Adams recently proposed his own plan to free up more than 100 million square feet of office space to provide affordable housing units to tens of thousands of residents.
In a recent poll by Boston.com, the Downtown Office to Residential Conversion Pilot Program appears to have overwhelming public support. The poll showed that 63% of respondents supported the changes, with many expressing that the program will offer a much needed increase in housing options as well as bypass many of the lengthy processes of new housing development, as the buildings already exist. Among dissenters of the plan, many expressed concern that office spaces would not be able to adequately accommodate residential units, as there are many differences between the two uses of space. Additionally, a few respondents expressed concerns that the downtown office spaces will be converted into luxury apartments as opposed to affordable housing units.
With concerns that affordable housing would not make economic sense for companies and developers to provide, it is important for the government regulations that were proposed within this plan to remain in place. To help reduce the housing crisis burden off of the shoulders of the most affected populations, the plan must ensure that the promised percentage of units would be able to be provided to middle and lower class residents as affordable housing units. The lack of trust that some Bostonians have in governmental policy being able to provide for low-income communities is clear and likely exacerbated in the face of the recent surge in housing prices accompanied by a lack of measurable governmental action. Considering the proposed 75% tax reduction for developers, there is clear evidence that building owners have great incentives to participate in the plan, so it is up to regulation within that plan to determine if this idea can be turned into a significant increase in housing availability.
Currently, the Boston Planning and Development Agency is accepting applications for the Downtown Office to Residential Conversion Pilot Program starting in the fall up to June of 2024. The accepted properties would be required to comply with zoning and energy efficiency standards, and construction would be set to begin in October 2024.
