Office to Residential Building Conversion Sector

[rocketphish]

Fee cuts aimed at spurring office-to-residential conversions show ‘positive signs,’ councillor says

By David Sali, OBJ
April 10, 2026

Measures such as a pilot project aimed at spurring more office-to-residential conversions in Ottawa are showing “promising signs” of breathing new life into the downtown core, the councillor for the area says. Somerset Coun. Ariel Troster said the city has implemented a number of initiatives in recent months to help streamline the approval process for downtown residential developments and reduce costs for developers. “We’re throwing a lot at the wall,” she told OBJ in an interview this week. “The point is we’re trying to stimulate housing development and we’re trying to specifically encourage office-to-residential conversions. And I’ve seen some really promising signs downtown, so it looks like it’s working, so we should just keep going.” Two years ago, council gave the green light to a two-year pilot project to cut cash-in-lieu of parkland fees on office-to-residential conversions in Troster’s ward to eight per cent from 10 per cent in a bid to encourage developers to repurpose underused buildings in the core. Last fall, council approved a plan to waive CIL fees entirely for all conversion projects in Ottawa for 18 months while city staff conducted a “comprehensive review” of the policy.

Cash-in-lieu of parkland fees are paid by developers to the city as an alternative to dedicating a portion of land on the property for greenspace. For office buildings, the rate is two per cent of the land’s value, while rates for residential developments range between five and 10 per cent. Before the recent fee freeze, developers working on office-to-residential conversions were required to pay 10 per cent cash-in-lieu of parkland fees in most parts of the city. A few conversions have been launched in Somerset ward since the original pilot program began. For example, CLV Group is repurposing an 11-storey building at 360 Laurier Ave. into about 140 rental suites, while District Realty is turning an 11-storey tower at 200 Elgin St. into 122 apartments. Both projects are almost complete. Jenn Morrison, CLV Group’s vice-president of planning and development, said any measure that saves developers money is a win for the industry and ultimately for residents who have more choice of housing. “It’s not one thing that’s going to move the needle,” Morrison said. “It’s multiple things that help to get developments off the ground.” The parkland fee reduction for conversions is part of a range of solutions from the city aimed at bringing new life to Ottawa’s downtown core, which was hit hard when office towers hollowed out during the pandemic and is still struggling to gain momentum. But Troster sees reason for optimism. Citing new housing developments such as 200 Elgin and Taggart Group’s condo project at the corner of Bank and James streets as well as the addition of amenities like the Food Basics store near the Lyon LRT station, she said efforts to attract more residents to the city centre are bearing fruit.

“All of those are positive signs,” she said. “We’re not out of the woods yet, but certainly (there is) reason for optimism and reason to keep going.” However, the councillor conceded more needs to be done to revitalize Ottawa’s downtown.

To that end, she wants the federal government to speed up its plans to offload aging office towers to developers in a bid to kickstart more conversion projects.

Potential efforts to repurpose former government buildings – such as a proposal to turn the Jackson Building at 122 Bank St. into affordable housing for Indigenous people – remain in limbo, she noted. “That is just taking way too long,” Troster said of the feds’ plans to divest the nine-storey building at the corner of Bank and Slater streets. “The longer those properties basically sit dark or mostly dark, the worse it is for the downtown core. In the time we’ve been waiting for (the federal government) to divest the properties, they could have been redeveloped.”

Troster said she’d also like to see developers build apartment complexes with more “amenities specifically designed to attract families.” Once couples who rent downtown start having children and require a space with more than two bedrooms, she said, “there’s kind of nowhere else for them to go even though they want to stay in the core. That’s a problem I’d like to see tackled.” Still, Troster said her ward is heading in the right direction. “I think any housing is good,” she said. “Any more people downtown is good. I think we’re starting to see the positive (results) of some of those investments.”

https://obj.ca/city-extends-pilot-for-conversions/

[rocketphish]

Have office-to-residential conversions across Canada run their course?
Second life, selective future: Where Canada's office conversion wave goes from here

Emma Caplan-Fisher, RENX
May 27, 2026

More than 10 million square feet of Canadian office space has been converted, demolished, put into the pipeline for redevelopment or rumoured to become so, according to Avison Young's principal and director of market intelligence for Canada, Marie-France Benoit.

That figure explains only part of what's been a significant structural shift in the country's commercial real estate market since the pandemic.

But as office leasing gradually stabilizes and the most conversion-ready building stock shrinks, the question is whether the conditions that made them work are still in place.

If all planned and rumoured projects proceed, Benoit estimates approximately 17,000 new residential units would be added to Canadian housing stock. Not enough to resolve the housing crisis on its own, she acknowledges, but the value extends beyond raw unit counts.

"It's also urban revitalization," she noted, describing how vacant, obsolete class-C buildings become hotels, student housing and residential projects that bring pedestrian activity back to city cores — particularly Calgary's, where changes have drawn significant new downtown residents.

But the conversion story isn't uniform across the country.



In Toronto, Benoit says the predominant model involves demolishing older, obsolete office buildings to make way for high-density, mixed-use or residential towers — a function of expensive land that incentivizes maximum density.

In Ottawa and Calgary, it's more often the building shell that remains, with interiors gutted and rebuilt as multi-residential units.

Calgary occupies a category of its own. The city was already grappling with elevated downtown office vacancy before COVID-19 arrived — sitting at roughly 20 per cent when its conversion program launched, according to Benoit.

The municipal grant program, which offers $75 per square foot to developers undertaking conversions, has made the financial case where it might otherwise have failed.

Geoff Kallweit, a principal at RJC Engineers, described it as creating "a special environment" in a city with "lots of available building stock, some incentive to do it and a high demand for residential. The three things together make (Calgary) still quite attractive," he observed.

Nearly a dozen class-B office buildings have been successfully converted in Calgary's downtown core, according to Kallweit, who has worked on multiple such projects.

Ottawa has taken a different approach, streamlining the approval process and implementing as-of-right zoning for conversions rather than offering direct financial subsidies, Benoit said.

The result, she added, has been notable, with roughly one million square feet of older class-B and -C inventory in downtown Ottawa either complete, under construction or planned for conversion — representing nearly 10 per cent of that inventory class.

She described Vancouver as largely absent from the conversion conversation, for reasons both structural and economic. The only conversion Avison Young has tracked in Vancouver was an office-to-hotel transaction.

Benoit explained the city lacks the aging office inventory found in eastern markets, and land values are too high to support the economics of keeping existing structures. Plus, Kallweit adds, the high-seismic zone that Vancouver's in, introduces complexity and cost to any retrofit.

Regardless of location, when it comes to conversion potential, a building's physical characteristics matter enormously.

Kallweit points to floor-plate size as a primary filter: residential conversions require window access for every unit, which large, deep floor plates make difficult or expensive to achieve.

The average conversion candidate nationally, according to Benoit's data, was built around 1966 and has a floor plate of roughly 12,000 square feet — old enough to be economically obsolete for office use, compact enough to adapt for residential.

"You've got to redo all of that," Kallweit emphasized, adding that while the complexity is real, experienced developers treat it as a challenge to manage within the process rather than a reason to walk away. He's seen Calgary developers complete the process five times or more.

The broader office market has begun to shift in ways that affect conversion economics, according to Benoit.

Demand is recovering, she says, but it's highly concentrated in trophy and class-A space. Class-B buildings — the primary conversion candidates — remain at double-digit vacancy in most markets, while class-C space, that can't compete for modern tenants, continues to move toward its highest and best use case, like residential, hotel or student housing.

What's changed most visibly in the past few years, she says, is the return of institutional capital to straightforward acquisitions: buying quality buildings as office assets, not conversion plays. "There's more clarity now about the future of office. It's easier to envision what the market will look like five years from now than it was in 2022."

And that clarity is gradually redirecting capital. Conversions will continue, both Benoit and Kallweit agree, but driven by obsolescence, rather than pandemic-era panic.

As Benoit put it, the spotlight has moved: "The focus is on the big shiny towers," while the work of finding second lives for aging buildings carries on, building by building, city by city, wherever the economics allow.

https://renx.ca/have-office-to-residential-conversions-across-canada-run-their-course

[J.OT13]

Nice to see Ottawa is a leader in office to residential conversion.