The White House announced new incentives in late October to help local and state governments bolster affordable housing supplies. The incentives focus on converting commercial office spaces into affordable housing by directly financing or subsidizing the cost of conversion.
The Biden administration's new incentives are a welcome addition to the existing tools available to state and local governments to address the affordable housing crisis. The conversion of commercial office spaces into affordable housing is a particularly promising strategy, as it can help to revitalize urban cores and create new housing options for low- and middle-income residents.
One of the key features of the new incentives is that they will provide direct financing to developers who convert commercial office spaces into affordable housing. This financing will help to reduce the upfront costs of conversion, which can be a major barrier for developers.
In addition to direct financing, the new incentives will also subsidize the cost of conversion. This will make it more financially feasible for developers to convert commercial office spaces into affordable housing, even if the market rents for affordable housing are lower than the market rents for commercial office space.