Office to Residential Conversion
Portland’s Central City was hard hit during the pandemic and its recovery has been mixed. One of the biggest challenges is a record-high office vacancy rate. This is an issue in the downtown core, Old Town, and other commercial sub-districts. The prevalence of hybrid work impacts areas of the Central City differently given each district’s mix of business and industry.
In response to these challenges, the city and Prosper Portland, along with public and private partners, are moving forward with an initiative to convert vacant office space to residential uses. These conversion projects will:
- provide opportunities for additional, much-needed housing with access to excellent transit service;
- add to the vibrancy of the central city at all hours, and;
- provide support for downtown small businesses, restaurants, and retailers.
Advance Portland, the city’s plan for inclusive economic growth, recommends policy considerations for the Central City, including incentives to support vacant commercial to residential conversions. An incentive program to convert offices into residential spaces is needed to facilitate meaningful adaptive reuse, especially considering the limited number of buildings that meet the conversion program requirements.
Office to Residential Conversion Feasibility Study
In 2023 Prosper Portland commissioned a study led by ECOnorthwest and Gensler to understand the feasibility of office to residential conversion across the Central City. The nature of office to residential conversion is that unique building characteristics have a large influence on suitability and ultimately financial feasibility. ECOnorthwest conducted market research to determine expected market rents for a converted office, then tested the financial feasibility using a pro forma analysis. To provide accurate assumptions in the financial analysis, a team of technical experts was engaged as sub-contractors. Gensler produced test fits for each of the buildings, KPFF and Glumac evaluated the mechanical, electrical, plumbing, and seismic costs, and Turner Construction produced cost estimates.
Pilot Projects
Casket Building
In November 2024, the Prosper Portland Board authorized providing a Commercial Property Loan to the Oregon Casket Redevelopment, LLC project in an amount of up to $7,000,000. The Oregon Casket Building project, located at 403 NW 5th Avenue in Old Town, involves converting a vacant 25,000 square foot commercial building into 34 residential units and delivers on the goals of the Old Town Action Plan.
Falcon Building
In August 2024, the Prosper Portland Board of Commissioners authorized a $4,352,000 commercial property loan to support the conversion of The Falcon Building located at 321 NW Glisan Street from an 85,500 square foot office building into a 59-unit middle-income residential apartment building
