As cities continue to navigate their new post-pandemic reality, the conversion of commercial buildings to residential is a growing area of opportunity for building owners and developers. From retrofitting to restoration and adaptive reuse, converting an existing structure into housing is ideal from a sustainability perspective. 

According to the CBRE, in Canada, the national downtown office vacancy rate is at 17.1%, up from 16.4% in the two previous quarters. There are several factors that may be contributing to the nationwide trend, including tech industry downsizing, hybrid work becoming the norm, and rising concerns around a recession, putting a pause on office expansion plans. 

With this reality taking shape in metropolitan areas around North America, well-planned conversion projects are critical to repurposing vacant commercial space, in a way that is sustainable both socially and environmentally.  

In this post, we explore what it takes to successfully convert a commercial building to a residential one. Also, we’ll highlight recent affordable housing conversion initiatives and adaptive reuse projects in major metropolitan areas.

What Makes for A Successful Conversion Project? 

Not every building possesses the same potential to become housing. The first step to determine the feasibility of conversion is by conducting several assessments. Like peeling back an onion, layers of unique challenges can be uncovered in the process. 

As a necessary starting point, a building condition assessment measures the major aspects of a building’s current state, including but not limited to structural deterioration, seismic evaluation, lateral windrow studies, mechanical and electrical systems, conveyance systems, amenities, and interior finishes, to see if it conforms to code, or how far off it is. 

In addition to building specifications, details around zoning and code regulations play a large role in the decision-making process. 

While the notion of conversion from commercial to residential use may be relatively new, the solution required to deliver one successfully relies on the combination of several well-established services.
A typical conversion project can see Entuitive’s structural, building envelope, and sustainable performance experts collaborate to extend and maximize an existing structure’s lifecycle.  

Affordable Housing as a High-Impact Effect  

Affordable housing has long been a challenge for sprawling cities like Toronto, Vancouver, and New York. A major roadblock to keeping up with the demand has been the time-consuming approval, construction, and take-to-market process. Reusing, restoring, or retrofitting an existing structure through conversion can help speed up this process. Plus, it can be less expensive than building new.  

Cities with the most conversion projects underway are supported by government-funded financial incentives. To contribute to the stock of affordable housing, many of the incentives include a stipulation which ensures that a percentage of the units will be allocated to low-income housing. Entuitive is seeing this in several of its markets, including its newest market Ottawa.  

The downtown office vacancy rate in Ottawa’s core, for example, is projected to rise to nearly 14% in 2023. Last month, a resolution was passed by the Ottawa city council to reduce building permit wait times for developers. It only applies if 20% of the units are dedicated to affordable housing. Nevertheless, there are an estimated 286 suitable adaptive reuse candidates in Ottawa. 

The study suggests that a building’s age and a smaller floor plate size are considered key criteria for a residential conversion, while the feasibility of a project is ultimately based on building condition assessments and associated costs. 

Neoma – Formerly known as Sierra Place, Calgary, AB

Adaptive Reuse in Major Metropolitan Areas 

 Residential conversions are just one example of adaptive reuse. The goal of adaptive reuse is to change the use of an existing building to an entirely different occupancy type, often due to a reduction in demand for the current use, or because the building no longer serves its original purpose. 

In Q4 of 2022, Toronto saw a 13.6% downtown office vacancy rate, close to Ottawa’s number. Last year, the city council passed a plan to renovate eight city-owned properties, with three of the proposed sites identified as heritage properties. There are also initiatives such as ModernTO, which aims to shrink vacant office space and create 500 to 600 new affordable housing units, a step in the right direction for the city’s needs. 

In July 2022, the NY Forward program was announced in New York, a plan to revitalize the downtown areas of the state’s smaller cities, hamlets, villages, and neighbourhood municipal centres.
The program builds on New York’s DRI, Downtown Revitalization Initiative plan. The plan strategically awards specific communities with funding to develop revitalization plans. So far, the program is seeing a positive ripple effect across the state as many older and historic structures are “avoiding the wrecking ball.”   

Finally, in Western Canada, Calgary announced the Downtown Incentive Program in 2021 to help building owners turn offices into residential areas. As of 2023, the program has five approved projects, six waiting to be announced, and three in the approval process. Strong financial incentives and younger office buildings are part of the city’s recipe for advancement in this area.  

 Apart from the program, Entuitive’s most recent commercial-to-residential conversion, Neoma (formerly Sierra Place) was converted into a supportive housing complex with 82 affordable units and four floors of transitional housing and shelter services. The first-of-its-kind project in collaboration with Inn From the Cold and Project Thrive is helping to provide housing to vulnerable families while giving some individuals the opportunity to secure stable employment.  

The tangible effects of a successful residential conversion can include city centre diversification, nurturing the growth of walkable cities, and an improved quality of living for future residents.  

As Entuitive delivers more of these projects, we are developing a playbook on how to help our clients navigate the economic, geographic, and functional challenges of converting existing assets into functional and sustainable residential buildings.