Healey puts $15 million behind Boston's office-to-housing push

The Healey administration is pumping $15 million of state money into Boston's push to incentivize large-scale office buildings owners to convert from cubicles to housing, the city and state announced Monday.

Since Mayor Michelle Wu launched her Office to Residential Conversion Program pilot in October, the city has received nine applications to create a total of 412 units of housing across 13 buildings, converting 403,000 square feet of office space to residential space. Wu's office said the state money will be used to "incentivize larger-scale office buildings to convert to housing, which often can be more costly due to the complexity of the projects."

A maximum of $215,000 state money will be available per affordable unit, with a state funding cap of $4 million per project.

"Our administration is committed to supporting municipalities in their efforts to convert underutilized office space into housing, which is a critical tool for increasing housing availability and lowering costs," Gov. Maura Healey said in a statement.

Housing and Livable Communities Secretary Ed Augustus said the state's involvement in Boston's conversion program "is a testament to Governor Healey’s commitment to jumpstart housing production now." He also said the announcement "is good for housing, the environment and our economy."

The state money will come from the Affordable Housing Trust Fund, which typically requires more than 20% affordability from projects it supports, according to the Executive Office of Housing and Livable Communities. A spokesman said the $15 million contribution is one-time funding, though the housing bill pending before the Legislature includes additional capital for office space conversions.

The program is meant to address the need for more housing in Boston as well as "post-pandemic economic shifts," like the staying power of remote work and its tagalong effects on downtown Boston's vibrancy and economy. Developers who convert office spaces into residential units are able to obtain a payment in lieu of taxes (PILOT) incentive through the city's program. With the extra $15 million from the state, the city said it "will be able to catalyze office-to-residential conversions and utilize an expedited permitting process to meet the urgent need for these conversions."

With the infusion of state money, Boston is also extending the program's application deadline to Dec. 31, 2025, though approvals will be made on a rolling basis. The city said all applicants must commit to pulling a full building permit and starting construction by Dec. 31, 2026. With the extension, Wu's office said it expects to see an additional 300 to 500 units of housing realized.