DC Offering Millions in Tax Breaks for Office Conversions Downtown
By Keith Loria March 11, 2024 5:21 pm
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Washington, D.C., is offering millions in tax breaks for office conversions, in the hope it will bring more permanent residents to the city’s downtown.
Mayor Muriel Bowser introduced the Housing in Downtown program during a press conference Monday. It offers a 20-year tax abatement for office-to-residential conversions Downtown, with at least $41 million available through 2028. The D.C. City Council previously approved the tax abatement in 2023, and the city’s planning and economic development office (DMPED) released draft regulations for the program in January.
The program should help bring 13,500 new residents to the downtown area by 2028, according to an analysis by the mayor’s office. That’s 90 percent of Bowser’s stated goal of 15,000 new residents by that year, first mentioned in her D.C. “Comeback Plan” in January 2023.
“We have seen in other parts of our city how having the right balance of residents and workers can sustain a vibrant and thriving neighborhood,” Bowser said Monday. “We have a beautiful Downtown that is already bustling with people and activity, and the Housing in Downtown program will allow us to build on that in a very strategic way.”
The funds available for the program will ramp up over the years, with a $2.5 million cap over the first three fiscal years (2024, 2025 and 2026), followed by $6.8 million in 2027, and then up to $41 million in 2028. After that, the cap is set to 104 percent of the previous year’s total. Applications are available on the DMPED website, and the submission window will open on March 22.
Like many office-centric cities, Downtown D.C. has had trouble rebounding from the post-pandemic shift to remote work, due to its heavy concentration of office space and dependance on commuters.
Bringing more residents to the area, while investing in its public spaces and other amenities, will benefit the 320,000 employees and 25,000 residents who already live and work there, as well as the 16 million annual visitors to the nation’s capital, the mayor said.
The press conference took place during a hard hat tour of the Elle Apartments at 1111 20th Street, the District’s first major office-to-residential conversion in the Golden Triangle BID, which is slated to deliver in July. Once the headquarters for the Peace Corps and known as the Vanguard Building, the property was transformed into 163 residential units and 8,000 square feet of retail by developer Wilco.
“Wilco and our team undertook this project because we believe that people and businesses want to come back to the city, you just need to give them a reason, and the Elle Apartments will be one of those reasons,” Gary Cohen, chairman and president of Wilco, said at the press conference.
D.C. leads the country in office-to-residential conversions, with 11 currently in the pipeline and five under construction, according to the Mayor.
“The pandemic taught us some things that we knew already about the need to diversify our spaces,” Bowser said. “We are at 87 percent commercial uses in the downtown compared to 13 percent for residential uses, so getting to a better mix of residential to commercial will make for a more vibrant neighborhood.”
Keith Loria can be reached at Kloria@commercialobserver.com.
Update: A previous version of the story had the minimum amount available for the program at $50 million through 2028.
