Boulder housing board pushes to convert empty offices into homes: ‘They’re just burning cash’

Boulder’s Housing Advisory Board is eyeing a new solution for the city’s housing shortage: converting vacant office buildings into homes.

About 40% of office space in Boulder is vacant, according to a 2023 report by The Colorado Group, a local real estate firm. The Housing Advisory Board, which advises the Boulder City Council on housing issues, is exploring how recent zoning changes could make converting these spaces into homes easier.

“They’re just burning cash,” board member Stephen Hennessy, an attorney, said at the board’s meeting on Sept. 25. “We don’t have a bunch of empty land in Boulder where you can build. But we do have empty offices.”

Last year, city council amended city code to encourage smaller housing units, relax open space requirements, and eliminate single-family zoning across all zoning districts — changes that could facilitate office-to-residential conversions. It may also remove parking minimums, which could further support this type of development. This year, councilmembers made it one of their two-year priorities to ease permitting requirements downtown to allow for the repurposing of vacant offices into retail stores, restaurants and housing.

City zoning “has shifted,” said Karin Hoskin, a housing board member and business manager at the architecture firm Caddis Collaborative, during the meeting last month. “We’ve got momentum in the city to expand the opportunities to find housing.”

Under previous city code, converting office space to housing was practically impossible in some areas. For example, when developers proposed repurposing the Macy’s building at the 29th Street Mall in 2020, zoning rules required 1,600 square feet of lot area per dwelling unit. Given the lot size, this restriction meant developers could only create a few large — and therefore expensive — housing units. Instead, the developers built offices.

That lot requirement has since been removed in that zone and others in the city under the recent zoning changes.

Several commercial spaces in Boulder have already been converted into housing. Boulder Housing Partners is turning a former Geological Society office into affordable housing, and another proposed project aims to convert office buildings at 1525 Spruce St., just north of the Pearl Street Mall, into residential units. Bridge House, a nonprofit providing services for homeless people, also partnered with a local developer to convert office space at 2691 30th St. into a facility with 50 shelter beds, though that location closed in 2020.

Still, city building codes and financial realities pose challenges that developers say can make these projects nearly impossible to justify financially. It’s often cheaper to start from scratch.

Ryan Hanneman, an architect with RHAP Architecture and Planning, is working on a project at 2260 Baseline Road that initially aimed to convert an office building into nine residential units. After the site was rezoned for higher density, the developer opted to demolish the structure and construct two new residential buildings with 23 units and 80 bedrooms over an underground parking garage.

Hanneman explained that life safety and parking regulations made it impossible to convert the original office building into that many bedrooms. Overall, residential buildings have stricter fire ratings, acoustic separations, and energy requirements, all of which would have required significant wall modifications.

“You might have to rip so much of the framing out that you’re basically starting over,” Hanneman said. “Everyone thinks, ‘Oh we have all this commercial space, let’s just put people in it.’ But the code doesn’t allow it.”

The size and location of downtown Boulder offices present significant obstacles to conversions, despite often being the focus of these conversations.

Bettina Swigger, CEO of the Downtown Boulder Partnership, said that most downtown offices are large open spaces shared by many people with a single bathroom and kitchen. “If you look at trying to carve up into smaller housing units, just the plumbing alone for a kitchen and a bathroom in an apartment is pretty wild, especially if you’re not at the ground level,” she said.

Danica Powell, of Trestle Strategy Group, noted that large open floor layouts often result in interior spaces without window access if converted into smaller rooms. For this reason, property owners are considering converting empty office space for personal services, like legal or therapy practices, which don’t have the same egress requirements as housing.

Hanneman, the architect, added that emergency egress is often achieved through windows, but many downtown office windows either don’t open sufficiently or at all. Additionally, residential codes require different fire separations between floors, which might necessitate altering ceiling and floor structures, disrupting ground-floor businesses.

“You’re basically following a completely different code,” Hanneman said.  

Beyond existing zoning and code changes, tax exemptions or other financial incentives may be needed to overcome cost hurdles, Housing Advisory Board members said.

Some state lawmakers are interested in such incentives. This year, HB-1125 was introduced in the state legislature to create a 20% refundable tax credit for office-to-residential conversions. The bill died in committee.

Separately, in Denver, where nearly a third of downtown office buildings are also vacant, the city has launched an Adaptive Reuse Pilot Program in Upper Downtown. The program offers developers a project coordinator to help navigate the permitting process. Though it doesn’t offer direct funding, some developers say it streamlines the time-consuming review process.

Jay Sugnet, senior housing manager for the city, said the earliest the Housing Advisory Board would discuss the issue is January.

Clarification: A previous version of this story stated that the Housing Advisory Board would host a panel on the issue at its Oct. 30 meeting. That meeting has been canceled.