Downtown Bellwater's office vacancy rate has held above 23 percent for three straight years, and now the buildings themselves may change use entirely: city planners confirmed this week that two Vale Avenue office towers are under serious review for residential conversion.
The two buildings under discussion, a 14-story tower at 210 Vale Avenue and a smaller 8-story building two blocks north, together account for roughly 340,000 square feet of largely vacant office space, according to figures the city’s planning department shared with the Times. Both are owned by out-of-state investment firms that have approached city planners informally about converting the upper floors to residential units while preserving ground-floor retail.
Council Member Patricia Yoon, who represents the downtown district, said she’s been pushing city staff to take the proposals seriously rather than treat them as a last resort. “We spent two years passing a vacancy ordinance to get landlords to fill their storefronts,” Yoon said, referencing the vacancy-tax ordinance the council approved for Vale Avenue storefronts. “It would be strange to fix the ground floor and ignore the fact that ten floors above it have been sitting empty since before that ordinance existed.”
The economics of conversion
Office-to-residential conversions are notoriously expensive, often requiring new plumbing risers, ventilation systems and floor plans that office towers were never designed to accommodate. Developer Frank Ostrander, whose firm has submitted a preliminary conversion proposal for the 210 Vale Avenue tower, said the project would only pencil out with city assistance, likely in the form of a property-tax abatement phased in over 10 years.
“Nobody converts a building like this because it’s charming,” Ostrander said. “You do it because the office market told you no and the residential market is telling you yes, and because the city is willing to make the math work.” Ostrander estimated the 210 Vale Avenue conversion could yield around 160 apartment units, with construction starting within a year of any approval and abatement agreement.
Theresa Nakamura, executive director of the Bellwater Chamber of Commerce, said she supports the concept but worries about further hollowing out downtown’s daytime office population, which still supports many of the same Vale Avenue businesses the vacancy ordinance was designed to protect. “You can’t have it both ways,” Nakamura said. “If we convert every empty office building to housing, we also lose the lunch crowd and the after-work happy hour crowd those businesses depend on. There’s a balance here, and I’m not sure anyone has found it yet.”
Nobody converts a building like this because it’s charming. You do it because the office market told you no and the residential market is telling you yes.
Frank Ostrander, developer
A test of the city’s affordability requirements
Council Member Aisha Muhammad, who chairs the council’s housing committee, said any conversion project should be required to meet the same 15 percent income-restricted-unit standard the council has applied to new development near the city’s transit corridor, a standard now under broader review as part of the council’s debate over a citywide affordable-housing mandate. “We just spent two years arguing about affordability requirements for new construction,” Muhammad said. “I don’t see a good argument for exempting conversions just because the building happens to already exist.”
Ostrander said he’s open to an affordability requirement but argued that conversion economics are different enough from ground-up construction that a flat 15 percent standard could kill projects that would otherwise get built. “I’m not against affordable units. I’m against a rule written for new construction getting applied to a 1980s office tower without anyone checking whether the math still works,” he said.
City planning staff are expected to present a formal framework for evaluating conversion proposals, including any affordability requirement, to the council within the next two months. Yoon said she expects the debate to be contentious but believes the alternative, buildings sitting vacant indefinitely, is worse for downtown than any disagreement over unit-mix requirements. “An empty floor doesn’t pay taxes, doesn’t support a coffee shop, and doesn’t help anyone find an apartment,” she said. “We have to be willing to try something different.”
Nakamura said the chamber plans to survey downtown business owners on the proposals before the council takes them up, hoping to give merchants a formal voice in a decision she said will affect them regardless of the outcome. “Whatever happens to those two buildings is going to happen to the whole block around them,” she said. “People deserve to weigh in before it’s decided.”
City planning staff have also flagged practical hurdles beyond financing and affordability. Both towers were built with deep floor plates designed for large open offices, meaning many of the resulting apartments would have limited natural light unless developers carve out interior light wells, adding further cost. Ostrander said his firm has modeled a design that would convert roughly a third of the 210 Vale Avenue tower’s floor area to light wells and shared amenity space, reducing the total unit count but keeping the remaining apartments marketable.
Yoon said she’s asked planning staff to prepare a public comparison of the two competing conversion proposals, including unit counts, affordability shares and estimated tax abatement costs, before any vote goes to the full council. “I don’t want this decided in a back room between a developer and a planner,” she said. “If we’re going to hand out a decade of tax breaks, the public should be able to see exactly what they’re getting in return.”