Office-to-multifamily conversion projects have exploded in popularity over the last several years, up from 12,100 units in progress in 2021 to 71,000 units at the beginning of 2025.

While rising office vacancies and a demand for new housing have made these projects appealing for developers, costs remain a hurdle. A number of federal programs have supported projects across the country, including HUD’s Community Development Block Grants and tax incentives through the Department of Energy. 

Beyond this, several U.S. jurisdictions have made the conversion process easier for developers with a series of policy changes and incentives, according to a recent report by CommercialEdge. Here are a few of the programs that developers in these locations can take advantage of: 

• California approved $400 million in incentives for commercial-to-residential conversions in its 2022 budget, including $105 million in grants toward affordable housing conversions.
• Colorado’s Tax Credit Commercial Building Conversion offers refundable tax credits for conversions that will start between 2026 and 2035, up to a cap of $3 million per project and $5 million in total credits per year. 
• Wisconsin’s Act 18 provides interest-free loans of up to $1 million to convert properties into affordable or senior housing. 

A range of other states, including Florida, Montana, Rhode Island, Washington and Arizona, have also recently relaxed their zoning regulations to help facilitate conversion projects, including office-to-multifamily, according to CommercialEdge.

City programs

The City of Yes initiative in New York City, passed in January, changes the city’s zoning rules to allow for more housing development and conversion projects. Among other provisions, the minimum building age for commercial conversions has been reduced from 1961 to 1991. 

The Office Conversion Accelerator Program, adopted in 2023, offers contacts within city government to assist developers with conversion projects of 50 units or more. In addition, any adaptive reuse projects south of 96th Street in Manhattan are eligible for a 90% tax abatement for up to 35 years, provided 25% of the units are affordable at 80% of the area median income.

In Chicago, Tax Increment Financing funds are available for conversion projects that are at least 30% affordable. Among the beneficiaries is the LaSalle Street project, which will convert four office buildings in the city’s financial district into more than 1,000 residential units. The city allocated $151 million to this project in 2024.

Other cities with recently adopted conversion programs include:

• Washington, D.C., has accelerated its plan review process and relaxed its zoning codes in recent years, and its Housing in Downtown program offers a 20-year tax abatement for conversion projects.
• Boston implemented its Downtown Residential Conversion Incentive Program in 2023, offering a payment in lieu of taxes agreement for a 75% abatement on the market value of a property for up to 29 years. An additional $15 million in funding for affordable units was added the following year.
• San Francisco has exempted its downtown buildings from certain housing requirements that are difficult for former office buildings to meet, and offers a one-time transfer tax waiver for buildings approved for conversion before 2030. 
• Portland, Oregon, has implemented a simplified review process and temporarily exempted conversion projects from system development charges for seismic retrofits.
• Seattle has exempted conversion projects from certain design review points, including floor plate size and landscaping, as well as the city’s Mandatory Housing Affordability requirements. 
• Minneapolis’s Office to Residential Conversions Amendment, passed in September 2024, reduced review times by one to two months, removed the public hearing requirements and created a five-year exemption from affordable housing requirements.
• Denver’s Adaptive Reuse Pilot Program provides government-based project coordinators for conversion applicants in the Upper Downtown neighborhood. 
• Pittsburgh’s Downtown Conversion Program provides funding support if at least 20% of the converted building’s units are affordable, with more support given the more affordable they are.