The Conversion Question in Washington, D.C.

To encourage conversions of older commercial buildings for residential use in the nation's capital, where the office vacancy rate is around 11.4 percent, D.C. Council members are considering new legislation to provide a tax abatement of up to $20 per square feet for 10 years, capped at $5 million a year.

Leona Agouridis, executive director of the Golden Triangle Business Improvement District, suggested to The New York Times that building owners must decide whether to rebuild or renovate to higher building standards, “It’s natural in the cycle of buildings. It’s like your home, you get to certain point, you need to replace major systems. But with renovation comes opportunity. From a neighborhood perspective, it makes a lot of sense to get that conversion going.”

In a report released last month, the DowntownDC Business Improvement District said the new market-rate residences would be worth $600 a square foot, compared with empty office space valued at $450 a square foot. “Even with worst-case assumptions,” the report said, the net cost of the program would be no more than $2 million to $3 million a year in forgone tax dollars.

Read more