16-18 Hawley St. Photo courtesy of Dinosaur Capital Partners
A new program tied to the 2024 housing law is being tapped to support nearly 200 new rental units in downtown Boston, part of an effort to transform vacant class B offices into housing.
Dinosaur Capital Partners will receive $4 million to help build 110 new rental units, including 22 income-restricted units. at 16-18 Hawley St., above the Milk Street post office, Gov. Maura Healey’s office announced Wednesday.
Another $3.4 million will go to help KS Partners create 80 new rental units, including 16-income restricted units, at 15 Court Square.
KS Partners received BPDA board approval for its project in March. Dinosaur Capital got its go-ahead in May.
More state funding will be distributed “later this year,” Healey’s office said.
“I’m thrilled to see state and city collaboration delivering real results for our community,” Sen. Lydia Edwards said. “These office-to-housing conversions at 31 Milk Street and 15 Court Square are exactly the kind of bold, creative solutions we need to address our housing crisis while breathing new life into underutilized spaces.”
The projects have also secured 29-year tax breaks from Boston’s office-to-residential conversion program. Mayor Michelle Wu pledged in March’s State of the City speech to expand the program to include local colleges with dorm projects in mind, plus large employers looking to build “workforce housing.”
“The state’s funding will allow nearly 200 additional homes in our office-to-residential conversion program to get under construction by the end of the year, for greater downtown vibrancy and support for our local small businesses,” Wu said.
Office use has waned in the years since the pandemic caused more people to work remotely, and at the same time the state’s housing affordability problems have deepened.
But as of January, only two office conversions had been funded, plus Suffolk University’s bonding-financed office-to-dorm conversion at 101 Tremont St. thanks in part to the high cost of development financing and the extra-costly nature of adding the kinds of plumbing and other services to convert prewar, idiosyncratic office buildings into housing.
Since its launch in late 2023, the conversion program has received applications to create 762 housing units in 20 largely vacant office buildings.
Research by commercial brokerage Hunneman puts the current downtown Boston office vacancy rate at 19.7 percent, and the class B rate at 22.7 percent.
