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Boston office-to-housing conversions stall as costs rise
A $40M financing deal for a 31 Milk St project underscores how higher construction costs and layered incentives are straining new conversions, with only 431 of 2,331 proposed units starting or completing construction.
Housing conversions are proving harder to launch in Boston even as developers line up plans to turn obsolete office space into homes, according to Bisnow. While one downtown project has secured financing, the broader pipeline is still largely stuck before construction begins.
Dinosaur Capital closed on a $40M construction loan to convert a downtown Boston office building at 31 Milk St. into 110 residential units. The project had received approval more than a year earlier, but by the time the company secured the loan, construction costs had risen nearly $16M from when the plan was first proposed, a partner at Tocci said.
The financing also required assembling a complex capital stack, including a city tax abatement, a federal historic tax credit, and a $4M grant from the state. As Bisnow reported, the developer team was able to obtain the subsidies, but still had to work to piece together financing for the deal.
Despite the progress on Milk Street, Bisnow said most proposed office-to-residential conversions have not reached construction. Since late 2023, developers have proposed 29 conversion projects for 2,331 units across downtown, but only 431 units have started or completed construction, based on Boston Planning Department data, while experts cited by Bisnow expressed skepticism that the remaining proposals will be finished as planned.