Halifax considers incentives for developers who convert old offices to apartments

In an effort to respond to its ongoing housing crunch, the city of Halifax is consid‐ ering ways of encouraging developers to convert old offices into new apartmen‐ ts.

Since reaching an agreement last fall to get money from the federal Housing Accelerator Fund, Halifax has begun to develop a pilot program that will use some of that money for grants to convert some downtown office buildings in‐ to housing.

"We don't have an office crisis; we have a housing crisis," said Coun. Waye Ma‐ son in an interview Friday. "It seems like a smart thing to do to convert empty office spaces into residential that will be full as soon as it's done."

Mason said staff are still working out details but he thought the grant program would take up "a couple of million" of the $79 million in federal housing money, and this would be enough to fund "two or three" pilot conver‐ sions.

At least three buildings have been suggested as pos‐ sible candidates for the pilot program: the former Centen‐ nial building on Hollis Street, the former RBC building on George Street, and the former BMO building on George Street.

Mason said the advantage to the city is that such projects could provide hous‐ ing quickly, have a low impact on the streetscape, and be more environmentally friendly than tearing down old buildings and sending the waste to landfill.

The units would be priced at market rates.

"We would of course love to see far more federal and provincial investment in af‐ fordable housing; we need thousands of affordable housing units," Mason said. "But we also need to see these conversions and be‐ cause it can be so expensive to convert commercial, that might not be the right place to put the affordable hous‐ ing."

Mason said a grant pro‐ gram could be required for "rapid change" in the down‐ town.

"If we want to see these buildings get turned into units that are occupied quick‐ ly, I think it's okay to incen‐ tivize that," he said.

A recent report from the Canadian Urban Institute, a Toronto-based organization dedicated to knowledge on city-building, called Halifax a "capital of conversions."

"Halifax really punches above its weight in terms of the amount of space that has been converted to housing," said Jennifer Barrett, the managing director of the CUI.

She attributes this to a growing demand for housing, a declining demand for of‐ fices, a lack of vacant land, policy changes to develop‐ ment requirements, and the city's "small scale" develop‐ ers.

Several conversions are underway in Halifax, includ‐ ing those from Sidewalk Real Estate, a company whose an‐ nounced projects include a former hotel on King Street in Dartmouth, the Centennial office building on Hollis Street, and the RBC building on Dartmouth's Portland Street.

Other recent conversion projects include the Tramway building at the corner of Bar‐ rington and Sackville streets, and a former office building on Spring Garden Road op‐ posite Park Lane mall.

"We've been told by de‐ signers that any building could be converted," Barrett said. "It's just the level of complexity and the result of what you would do in that conversion."

For example, a large building with a lot of space on the inside is a difficult conversion because so much of the space lacks access to natural light. A rectangular building with windows on all sides is an easier conversion.

The age of plumbing and electrical systems is also im‐ portant.

Barrett said the CUI has counted about 300 or 400 units in Halifax where con‐ version is already underway or complete, and it estimates there could be potential for up to 500 more.

Barrett said the CUI's re‐ search suggested there is po‐ tential across Canada for at least 20,000 converted units.

Downtown office va‐ cancy rate at 18 per cent

In early April the commer‐ cial real estate company CBRE released a report ex‐ amining the Canadian office market during the first quar‐ ter of 2024.

One of the findings of the report was that many com‐ mercial tenants are leaving older downtown offices in favour of newer buildings.

"Conversions are begin‐ ning to gain traction in Hali‐ fax as the flight-to-quality has led to obsolete office towers being repurposed to vibrant residential buildings," the report stated.

According to the CBRE re‐ port the overall vacancy rate in Halifax's office market is 14.1 per cent, a number that accounts for both downtown and suburban areas. The re‐ port said within the down‐ town area the vacancy rate is higher at 18 per cent.

The national downtown office vacancy rate was 19.5%.

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