“potential new program to incentivize conversion of commercial properties to residential use in Central Washington”

photo by C Buoscio

From the Mayor’s Office:

“Today, as part of #FairShot Week, Mayor Muriel Bowser and the Office of the Deputy Mayor for Planning and Economic Development (DMPED), in collaboration with the Office of Planning (OP) and the Department of Housing and Community Development (DHCD), is releasing the Housing In Downtown Request For Information (HID RFI) to obtain input from current and prospective property owners on the design of and approach to a potential new program to incentivize conversion of commercial properties to residential use in Central Washington, with an emphasis on the Central Business District.

“Our Downtown is the economic engine of our city, and a vibrant downtown means more resources to invest in people, programs, and neighborhoods across DC,” said Mayor Bowser. “Exploring ways to bring more residents Downtown is a step toward reimagining Central Washington and restoring its vibrancy for our residents, visitors, and businesses.”

The current and anticipated high office vacancy rates in the Central Business District have introduced an opportunity to analyze the viability of transitioning traditional office-centric downtown to include more residential buildings.

Adding more housing in Central Washington could help strengthen and diversify the retail environment while adding vitality both during and after recovery. New residents would increase pedestrian activity and expand primary retail trade hours later into the evening and through the weekend and thus serve as one tool, alongside others such as business attraction and retention, public space activation, and tourism marketing, to reimagine downtown vibrancy and spur economic recovery and growth. The Central Business District is currently 92% commercial and 8% residential. Other submarkets have a better balance of uses and thus are more vibrant – even with reduced commuting patterns.

“Many have said we should explore residential conversions in Central Washington, but market conditions and financial factors often discourage property owners from pursuing it,” said Deputy Mayor John Falcicchio. “The HID RFI will help us identify the tools to uncover the hidden gems within Central Washington that can be converted from a commercial use to residential.”

The HID RFI is designed to solicit informed feedback to craft a pilot program to increase vibrancy in Central Washington through increased residential uses. Specifically, DMPED seeks information, particularly from current or prospective property owners, about the current opportunities and challenges of residential conversions downtown in order to formulate impactful policy or program intervention(s) to:

1. Encourage conversion of commercial space (including office, hotel, or retail) to residential in Central Washington in order to increase vibrancy and offset potential declines in commercial property tax revenue; and

2. Increase affordable and workforce housing units downtown

Respondents must submit questions on the RFI by 5:00 p.m. on Thursday, December 30. The deadline for submission is 5:00 p.m. on Friday, January 28th.

Washington, DC, like many urban metros across the U.S., is experiencing historic levels of office vacancies in its Central Business District, currently 16.9% vacant as of Q3 2021, compared to 14.0% citywide. Office vacancy has increased dating back to Q4 2018 and remained consistently above 16% throughout 2020. Recent surveys by the Greater Washington Partnership (GWP) estimate that remote workers in the Capital Region may increase five-fold from pre-pandemic levels, increasing the potential for sustained high vacancy rates in the Central Business District. More recent GWP survey data from September 2021 indicates employers’ return to physical worksites is slower than anticipated from initial surveys in December 2020 and teleworking and hybrid scheduling is likely to remain in the medium- to long-term.

The HID RFI follows an Urban Land Institute Advisory Services Panel sponsored by DMPED in November 2020 that engaged professionals and local stakeholders to explore strategies to support an equitable economic recovery from the COVID-19 public health emergency in the Central Business District (CBD). The report is available here.

At the start of her second term, Mayor Bowser set a bold goal to deliver an additional 36,000 units of housing – including at least 12,000 units of affordable housing – by 2025. By distributing these goals across the District’s 10 planning areas, Mayor Bowser made DC the first jurisdiction in the nation to create affordable housing goals by neighborhood.

Throughout #FairShot Week, the Bowser Administration is highlighting various new and existing programs designed to give Washingtonians a fair shot and accelerate the District’s economic recovery. The Mayor is promoting some of the many tools listed on ObviouslyDC.com that provide financial assistance and guidance to local businesses and businesses that want to open in, expand to, and create jobs and opportunity in Washington, DC.”