Posted Jan 4, 2024, 2:15 PM
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FYHA
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Join Date: Oct 2007
Location: Houston - Wichita, KS
Posts: 3,185
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https://www.houstonchronicle.com/bus...n-18578638.php
Quote:
Downtown Houston studies tax incentives to convert outdated offices to new uses
By Marissa Luck,
Staff writer
Jan 2, 2024
Warren/Staff photographer
Cities across North America are grappling with what to do with empty offices in a post-pandemic world, and eventually the city of Houston could join others offering tax incentives to entice developers to breathe new life into outdated offices.
Downtown Houston, the umbrella organization for Central Houston, Downtown Redevelopment Authority and Houston Downtown Management District, has been studying the possibility of an office conversion incentive program.
Downtown Houston recently released a feasibility study conducted by the consultancy AECOM of tax incentives that could spark more conversions in the city center. Downtown is the region's largest office market, with office vacancy rates over 25%. The study comes as the city faces the possibility of a large chunk of its tax base deteriorating as the value of vacant office buildings plummets.
Any tax incentives would have to be approved by City Council. Economic development officials must discuss the issue with the new mayor before proceeding, said Andy Icken, chief economic development official for the city. Icken, however, noted the success of similar incentives offered through the Downtown Living Initiative, launched to attract more apartment development by offering up to $15,000 per unit, has helped to bring downtown’s residential population to more than 11,000.
“When we (did the original) Downtown Living Initiative it was a fairly simple formula. … Anything we do here — if we do anything — is going to have to be a whole lot more complicated and focused,” Icken said.
Icken said the city engaged with Downtown Houston several months ago to help it understand best practices in other cities and challenges for what could lie ahead.
“This is the beginning of the process,” Icken said.
Cities from San Francisco to New York have launched incentive programs aimed at office conversions. Perhaps the most noteworthy has been in Calgary, Alberta, where, like Houston, energy companies are using less space. So far, 13 downtown projects have been approved as the city offers $75 per square foot for office conversions.
“Calgary came at this with a perspective of, ‘Oh my gosh, these buildings are now vacant in our downtown. … If we don't solve this, we're going to (see) billions in foregone tax revenue that we don't have to provide services to everybody,” said Kris Larson, president of Downtown Houston.
While other cities have focused on creating more housing, Larson said, Houston's conversion program may not be as limited.
“We’re generally agnostic to the future use of those buildings and only prefer that they are used by people — preferably in ways that further the diversification of downtown,” Larson said.
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