I first heard the phrase, “drive till you qualify” in the 1990s referring to first-time homebuyers who were priced out of Los Angeles and were heading east to California’s Inland Empire; in fact, it was probably still called Riverside County in those days. The economics underlying this eastward movement was the tradeoff between how much time you were willing to spend commuting versus and how much house you wanted. Economists would predict that those who earn the most are willing to travel the least, and so the high-earners bid up the price of housing close to jobs. That’s a theory from the early 20th century when jobs were clustered in downtowns. Things in real life started changing when high-paying jobs moved to the suburbs.
Things are changing again as jobs move to our dining room tables. Downtown office space is one of the first dominos to fall as hybrid- and remote-work are becoming the norm. As demand for office space declines, not only are there fewer workers in cubicles and corner offices, but there are fewer customers at coffee shops, lunch spots, and bars. Moreover, for downtown retailers, this decline in foot traffic and the rise in e-commerce is a double-whammy. As a result, developers and large-city governments are considering office-to-residential conversions.
Boston’s Pilot Program & Precedents
According to a recent paper from the NBER the Boston metro market is one of only six across the country where office-to-residential conversions are likely to be profitable. In an attempt to jump-start such a conversion in Boston, Mayor Michelle Wu announced an office-to-residential Downtown Residential Conversion Pilot Program, that will accept applications through June 2024.
While such an effort may seem new to Boston, there are many precedents with lessons for cities and towns across Massachusetts. For example, in the mid-1990s, New York City’s 421-g program was responsible for converting nearly 13 million square feet of lower Manhattan office…