Office Conversion Tax Breaks Grow as Cities Revitalize Downtowns

San Francisco, Boston, Chicago, New York, Washington, DC, and other major US cities continue to experience double-digit commercial vacancy rates in their business districts, hurting their tax bases.

One idea that caught on during the Covid-19 pandemic—and is now coming to fruition—is for cities to offer tax breaks and other financial incentives to encourage developers to convert idling office spaces to housing in struggling downtowns.

While each office-to-residential program is structured differently, the initiatives typically include a housing affordability requirement and are designed to simultaneously address high office vacancy rates and the shortage of new housing.

“It’s really important ...