Uncle Sam Throws His Hat into the Ring – October 30, 2023

The White House is getting involved in the movement to repurpose surplus commercial properties as residential. On Friday, the Biden administration announced a series of actions including new financing, technical assistance and sale of federal properties, all intended to encourage affordable housing development.

“Office and commercial vacancies across the country are affecting urban downtowns and rural main streets,” according to a fact sheet accompanying the announcement. “A new blog released today by the Council of Economic Advisers finds that office vacancies have reached a 30-year high from coast to coast, placing a strain on commercial real estate and local economies.

“At the same time, the country has struggled for decades with a shortage of affordable housing units, which is driving up rental costs, and communities are seeking new ways to cut emissions, especially from existing buildings and transportation.”

To help address both dilemmas, the administration unveiled a variety of actions on the part of federal agencies. They include the following: 

• The Department of Transportation (DOT) is releasing new guidance on how the Transportation Infrastructure Finance and Innovation Act and Railroad Rehabilitation & Improvement Financing programs – which combined have more than $35 billion in available lending capacity for transit-oriented development projects at below-market interest rates – can be used to finance housing development near transportation, including conversion projects. 
• DOT is releasing guidance intended to make it easier for transit agencies to repurpose properties for transit-oriented development and affordable housing projects, including conversions near transit. Transit agencies may transfer properties to local governments as well as non-profit and for-profit developers of affordable housing at no cost.  
• HUD is releasing an updated notice on how the Community Development Block Grant fund can be used to boost housing supply – including the acquisition, rehabilitation and conversion of commercial properties to residential uses and mixed-use development.  
• The General Services Administration will expand on its Good Neighbor Program to promote the sale of surplus federal properties that buyers could potentially redevelop for residential use.  
• The White House is releasing a Commercial to Residential Federal Resources Guidebook with more than 20 federal programs across six agencies that can be used to support conversions. These programs include low-interest loans, loan guarantees, grants and tax incentives, which may be used together to increase the economic viability of conversion projects. 

First impression is that these initiatives may represent more of a boon to residential developers than to office owners with properties that have become functionally obsolete. Still, this warrants looking into, and over the next several months, we’ll sound out Connect CRE readers on whether these programs have made a difference.