Downtown office buildings to become housing

Plans are getting underway to convert boardrooms to bedrooms in eight Boston buildings. Three real estate development firms plan to convert a combined 104,000 square feet of office space in multiple buildings in downtown and the West End into 170 apartments, according to applications filed to the Boston Planning and Development Agency in recent weeks. It’s the first in what some hope will be a wave of these conversions as the city wrestles with a massive housing shortage and as landlords grapple with reduced demand for office space in the wake of the COVID-19 pandemic and resulting surge in interest in working from home. Older, smaller office buildings in less-desirable downtown locations — often referred to as “Class B” and “Class C,” compared with the newer, costlier “Class A” towers — have seen much steeper vacancy increases and sharper declines in value since the onset of the pandemic. The growing vacancy in Class B and C space has long been noticeable to the commercial brokerages touring office tenants looking for new digs, said Adam Burns, president of Boston Pinnacle Properties. Boston Pinnacle Properties has the sixstory brick building at 281 Franklin St. (left) in the Financial District under contract to purchase for $2.8 million — around $500,000 less than the property’s assessed value of $3.3 million — and Burns hopes to turn it into 15 apartments. Five companies still have leases for office space at 281 Franklin, and they will need to vacate before the building can be converted. Three of those expire in June, another in November, and a third not until mid-2027. Burns notes that, in the current market, tenants have a good shot at landing leases at a much lower rent — maybe $20 less per foot than the mid-$50s per square foot some are paying now. If successful, 281 Franklin would be among the first participants in the BPDA’s short-term tax break program that offers a steep discount on property taxes to developers who begin conversion projects by October 2025. The pilot program would allow property owners to switch from a commercial property tax rate — currently $24.68 per $1,000 of assessed value — to a residential property tax rate — $10.74 per $1,000 of value — and then add a break of up to 75 percent off that reduced rate for 29 years.