Seattle City Council greenlights office-to-housing conversions, eyeing up to 2K new units

SEATTLE — Developers now have the green light to convert vacant office space into housing in downtown Seattle.

Under a new law, there could soon be as many as 2,000 new housing units, according to city estimates.

The city council signed off on an amendment to the land use code to let developers convert commercial, high-rise, and other buildings sitting empty in downtown into residential spaces.

"The units would be a mix of affordability levels with some units affordable to households with moderate incomes in the 80% - 100% of Area Median Income (AMI) range. We do expect that other units such as upper floor units with views, or direct access to amenities would serve higher income households," the city's Office of Planning and Community Development stated in an email.

RELATED:Seattle Land Use committee approves proposal converting commercial space to housing

“We know that not all office buildings are necessarily adaptable due to their layout, and any conversion would need to add plumbing and other amenities,” City Councilmember Tammy Morales stated.

“I've converted a hotel into workforce housing and know how expensive it is. It’s about three times more expensive than building new,” added Councilmember Tanya Woo. “I believe it will help reactivate downtown. We desperately need housing. This will help with that.”

This change stems from Mayor Bruce Harrell’s downtown activation plan released in 2023 amid the housing need and building availability. Seattle officials report the surplus of commercial office space jumped from a 5% vacancy rate in 2019 to 25% in early 2024.

“Building off of the innovative ideas we saw in our office-to-residential conversion competition, this legislation is an important step forward to make conversions a reality in our city, removing regulatory barriers and encouraging adaptive reuse of underutilized office spaces into new housing opportunities," Mayor Bruce Harrell wrote in an emailed statement following the legislation's passage.

Marc Angelillo with Stream Real Estate addressed the high cost with KOMO News as he looks to move forward with a project of his own, including affordable units. It's why he testified at the state Capitol building this year to help lawmakers pass Senate Bill 6175, cutting out the construction sales tax on conversion properties.

“It’s a real struggle to find buildings you can actually do this with, number one. And number two, to be able to make it work financially so that there is some incentive to make it happen,” Angelillo said.

The city’s Office of Planning and Community Development said it can assist developers with applying for low-cost financing help through the feds for conversion projects near transit stations. That funding exists through the Transportation Infrastructure Finance and Innovation Act (TIFIA) and the Railroad Rehabilitation & Improvement Financing (RRIF) programs.

“To qualify, the City must support the developer of the conversion as a project partner,” the spokesperson wrote. “The City is willing and interested to partner with conversion developers to apply for the federal funds, which provide loan terms that are much more favorable than market construction financing in the current economic climate.”

Building owners can submit applications immediately.