The New South Wales government will explore converting empty offices and unused government buildings into much-needed social housing, as commercial building owners grapple with a surge in vacancies.
The NSW housing minister, Rose Jackson, told Guardian Australia that providing incentives to developers to convert surplus office space presented a “good opportunity” for the state as it struggles with a soaring social housing waitlist.
While buildings in Sydney’s city centre might be too expensive, smaller commercial centres and underused government properties could be explored, the minister said.
“Everything is on the table,” she said. “If there are opportunities to do that in a way that aren’t unbelievably expensive, we’re keen.”
She added: “We have to make choices about how we deliver new stock and if there was a way to do that that was cheaper than just straight-up building new buildings, I would be very open to that.”
Australian office vacancy rates are now above 13%, representing the highest rate since the 1990s, as flexible working including work-from-home arrangements become entrenched.
The trend, evident in comparable nations around the world, has prompted widespread calls for office conversions, given the empty space contrasts with hot demand for private and social housing.
At this year’s World Economic Forum in Davos, the property sector was encouraged to start converting empty offices to apartments to address a global housing crisis.
Sydney has only a small number of successful conversions from offices to apartments. Most were completed years ago, such as the redevelopment of the former NSW police headquarters in Darlinghurst.
While developers would typically redevelop an office for higher-end residential tenants, providing more low-cost options would require government support, according to Robert Pradolin, the founder and director of Housing All Australians, a private sector group that advocates for affordable accommodation.
“It’s a bit of a furphy to say we can just develop these office buildings into social housing because the highest and best use is probably a commercial apartment or boutique office,” Pradolin said.
“It requires government involvement because social housing is not a market product that gets the return for the building owner.”
He said local and state governments would need to actively support office conversions through fast-track approvals, in public-private deals that could include setting aside a portion of the new apartments for subsidised rents.
“Developers will deliver affordable housing but they are not a charity.”
Jackson said incentives for developers would “absolutely” be looked at, as well as the realities of converting spaces designed for work into homes for our most vulnerable, including challenges of light, plumbing, green spaces and balconies.
“You can’t just convert a big, square office building into a whole bunch of little cubicles,” she said.
“We are keen to work with people who want to have an opportunity to say, ‘Hey, I’ve got a building here. It’s not being used. Here’s what an incentive could look like and I could deliver this housing.’”
David Gruen, agency head of the Australian Bureau of Statistics, said economic forces may start to push office owners to cater for the residential market.
“To the extent that people who own commercial buildings can’t find tenants, there’ll be an incentive to find somebody else,” Gruen said. “The economics of it may drive that decision.”
Parts of the US, including California, New York and Chicago, are reforming zoning laws and permits to spur office conversions, and some are offering subsidies to developers. There is a similar push in the UK and South Korea.
The Minns Labor government has this week come under scrutiny after announcing state departments had been asked to find unused crown land that could then be sold to private developers, with a minimum 30% to be used for social and affordable homes.
The opposition said the plan, along with the confirmed sale of the Waterloo South estate, was contradictory to the government’s election platform to end privatisation.
Minns insisted it was “not privatisation, not by even the loosest definition of it”.
