The idea of converting office spaces into residential units picked up steam since the pandemic-induced shift to hybrid work. Recent reports suggest office occupancy rates in Canada may not bounce back to pre-2020 levels given the rise of hybrid work, andBut as it stands, office space in downtown Toronto neighbourhoods must be replaced if it is removed, creating a major barrier for such projects to move ahead in Canada’s largest city.
Hullmark already has several office properties, themselves conversions from old industrial buildings, which Hull said might work as residential buildings. The company has also looked at buying some other office properties to convert, Hull said, but regulations such as the office replacement rule have stopped them from taking the plunge.
Market dynamics can also help make the economic case for conversions, Render noted. In Toronto, where rents are particularly high, he said the math might work out for more developers to jump in to the space.Still, rules barring the removal of commercial office space are a major barrier, Render noted. But with housing a major mayoral election issue and growing developer interest, he predicts conversions will eventually take off in the city.
Matthew Kingston, executive vice-president of development and construction at H&R REIT, the company behind the proposed project, said talks are ongoing with the city to “find common ground” when it comes to the office retention policy. . If elected, Bradford said he would eliminate the rule requiring office spaces be replaced foot-for-foot if the proposed development includes 20 per cent affordable housing.
Olivia Chow’s campaign said she is “open to exploring how we can animate unused office buildings, including converting some to housing and other uses, but it should be part of the broader conversation on how best the city can support recovery in Toronto’s downtown core,” among other models.
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