SUNDAY, OCTOBER 20 , 2019. THE WASHINGTON POST EZ EE G5
rent space on the roof for their
cell towers — it offers a panoram-
ic view of the Washington area.
“The view sold us,” said Scott
Shinskie, a partner at Varsity.
One of the biggest hurdles
facing project architect Soto Ar-
chitecture and Design was bring-
ing natural light into the living
spaces. The solution for bed-
rooms with no outside windows
was clerestory windows along
the tops of the walls and frosted
doors.
Not every apartment at the
Oxford suffers from lack of sun-
light. Hart’s three-bedroom unit
on the eighth floor has abundant
natural light and spectacular
views.
“I have that view from basical-
ly every room in my apartment,”
he said. “If you keep the bath-
room door open, you can get that
view from the bathroom when
you are brushing your teeth.”
Many newly built apartment
buildings come with standard
floor plans that resemble boxy
hotel rooms. Not the Oxford.
Because the architect wanted to
maximize the natural light in
each unit, there are 39 floor
plans, most of which have unusu-
al shapes with odd angles. Ac-
cording to Shinskie, it took both
high- and low-tech tools — every-
thing from v irtual-reality goggles
to blue painter’s tape on the
floors — to design the floor plans.
“It’s got some weird angles in
the other units,” Hart said. “Our
unit, not so much, with the
exception of the master bed-
room, but it’s large enough to
overcome the strange angles.”
Property manager Shaheer
Williams said many renters are
drawn to the unique shapes of
the floor plans.
The building does have some
things going for it — 1 2-foot-high
ceilings, concrete floors that
muffle sounds and extra-wide
stairwells and hallways.
“That was a selling point also,
the concrete construction,” Hart
said. “Because I worked there, I
knew you couldn’t hear through
the floors. And then a bonus, I
think, was the high ceiling.”
Although the exterior still re-
sembles the 1980s office building
it once was, the interior has been
completely transformed. The Ox-
ford has all the amenities one
would expect in a luxury b uilding
— a spacious 24-hour fitness
center, a 24-hour business center,
package storage lockers and
lounges with WiFi, fireplaces and
big-screen televisions. The 10th-
floor lounge has the best views in
the building, a pool table, s huffle-
board and a kitchenette. There’s
the ubiquitous dog-washing sta-
tion and a fenced-in courtyard
for pets to roam.
Rents range from $1,580 to
$3,018 a month.
Shinskie said it cost about as
much to renovate the building as
it would have to build a new one.
But the new building wouldn’t
have had t he features that set this
one apart — the concrete floors,
the high ceilings and the wide
stairwells and hallways. That
type of building would have been
too expensive to construct.
“You wouldn’t build this from
the ground up,” he said.
Asked whether his company
would consider doing another
project like the Oxford, Shinskie
said it would.
“We’re actually looking for op-
portunities,” he said. “This was
fun.”
[email protected]than offer financial induce-
ments. According to a 2017 G reat-
er Greater Washington story, no
office-to-residential conversion
in the D.C. region has used finan-
cial incentives from a local gov-
ernment.
But even with tax incentives,
other barriers exist to affordable
housing.
“The tax incentive would be
attractive, but you have to look at
all those other factors that just
may not be worth that effort,”
Munger said.
In a study conducted this year,
the National Apartment Associa-
tion found that the D.C. region is
the fourth-most-difficult metro
area in which to build new apart-
ments. The barriers to apartment
construction include high con-
struction costs, restricted land
supply, infrastructure con-
straints driven by traffic and
school crowding, and heavy af-
fordable housing requirements.
The starkest cost-benefit
analysis of office-to-residential
construction came from a study
done three years ago. The Mont-
gomery County Planning D epart-
ment contracted with Bolan
Smart Associates to look at the
potential reuse of office build-
ings in two markets — White
Flint and Rock Spring. As part of
the study, Bolan S mart compared
the cost of updating a hypotheti-
cal existing office building, con-
verting it to residential use, and
demolishing the existing build-
ing and constructing a new resi-
dential building. They found it
was much cheaper to update the
office building, projecting a prof-
it of $190,530. They projected a
loss of $12.9 million for an office-
to-residential conversion and a
loss of $10.7 million to demolish
the existing building and con-
struct a new apartment building.
Even so, the lack of vacant,
buildable lots, a waning demand
for office space and a surging
demand for housing are causing
some developers to overcome
their reticence. Escalating rents
are making the numbers work
more in their favor.
“Owners and developers in the
D.C. metro looked to other prop-
erty types, especially residential,
largely because of the return on
investment,” Nicholas Mills, an
analyst at CoStar, wrote in an
email. “In the office sector, rent
growth peaked at about 2.5 per-
cent in 2015, and has steadily
slowed since then. Apartments,
on the other hand, saw rents
grow 3.5 percent in 2015, and
while that growth rate slowed in
the proceeding years, rent
growth is back near 3.5 percent
again. Driving these rent gains is
the demand. Apartment demand
has been near u nlimited for luxu-
ry apartments over the past few
years, whereas office demand has
been lagging. And so it made
sense for a lot of these developers
to repurpose the land use to a
more profitable and in-demand
use case.”
The Oxford is Varsity Invest-
ment Group’s third office-to-resi-
dential conversion in the area.
What sold them on the building
was its location and view. The
building is on Oxon Hill Road
near National Harbor and adja-
cent to Rivertowne Commons
shopping center. Nearby retail
outlets include AMC Rivertowne
12, Home Depot and Safeway,
with Ta rget slated to arrive soon.
Because the 10-floor building
is atop one of the region’s highest
elevations — several companiesoffices that they might as well
live there, turning cubicles into
homes seems logical. But there
are sound economic reasons, too.
Across the region, as law firms
downsize and the federal govern-
ment retrenches, the Washing-
ton area is awash in vacant
offices.
Now, increasing numbers of
those underused office buildings
are being converted into residen-
tial dwellings in an effort to
address a worsening housing
shortage that is causing rents to
rise and driving up home prices.
Since 2008, 7.9 million square
feet of office space in the D.C.
region has been converted or is
being converted into residential
dwellings, according to Jones
Lang LaSalle ( JLL), a commercial
real estate brokerage. Fifty-three
buildings have made the transi-
tion — 2 1 in the District, 21 in
Northern Virginia and 11 in
Maryland.
Ta ke three former office build-
ings in Northeast Washington,
Rockville and McLean. Each one
was 100 percent vacant when
developers decided to turn them
into apartment buildings, ac-
cording to CoStar. Now, Antholo-
gy is 93 percent occupied, the
Metropolitan Rockville Town
Center is 94 percent occupied,
and Haden Apartments is 97 per-
cent occupied.
The Oxford, a 187-unit luxury
apartment building where Hart
lives, is one of the more recent
office-to-residential conversions.
Built in 1986, the building had
been sitting vacant for three
years when Bethesda-based Var-
sity Investment Group scooped it
up in 2017. It began leasing in
December and is 62 percent
leased.
Compared with other metro-
politan areas, the D.C. region lags
in office-to-residential conver-
sions. Philadelphia has been
much more active, with 180 such
projects in the past 20 years. That
city has more industrial-type
buildings that are prime for these
types of conversions, and the city
offers a 10-year tax abatement on
renovations.
But local municipalities have
so far resisted offering incentives
to developers to convert under-
used buildings into affordable
housing — which means the
trend is unlikely to benefit low-
income residents directly.
“It’s really costly,” said Paula
Munger, assistant vice president
of industry research and analysis
at the National Apartment Asso-
ciation. “I’m not s urprised all you
see is luxury because those are
the prices [developers] would
have to charge to get through all
of the issues with conversions.”
The D.C. Council created the
Office-to-Affordable-Housing
Ta sk Force last year to see wheth-
er some of the city’s excess office
space could be transformed into
affordable housing. In a report
prepared by the Coalition for
Nonprofit Housing and Eco-
nomic Development, the task
force found that “there are some
opportunities to convert vacant
office space to affordable housing
in the District,” but “office-to-res-
idential conversions are not the
most efficient way to address the
city’s pressing housing needs.”
The report recommended that
the District offer subsidies, zon-
ing incentives and feasibility
studies to developers if it wanted
to pursue office-to-affordable-
housing conversions.
There are plenty of buildings
waiting to be transformed. A
recent search of CoStar’s data-
base uncovered dozens of office
buildings in the region with
0 percent occupancy. According
to JLL, the District’s office vacan-
cy rate in the second quarter of
2019 was 11.7 percent, Maryland’s
was 17 percent and Virginia’s was
20.1 percent.
Converting vacant offices into
livable spaces appears to make a
lot of sense, but developers have
been reluctant to tackle such
conversions. It costs a lot of
money to transform offices into
homes. Rick Liu, an economic
and development specialist at
the Montgomery County Plan-
ning Department, suggested in a
post on the department’s blog
that there are cheaper ways of
dealing with vacancies.
An owner can leave a building
vacant in hopes of eventually
attracting a large tenant or the
federal government, subdivide it
into smaller spaces, r enovate it to
make it more competitive or
lower rents to attract more ten-
ants.
Liu also pointed out that the
architectural elements common
in office buildings — deep floor
plates, closely spaced structural
columns and dedicated core
spaces for elevators and utilities
— make such conversions a chal-
lenge for developers.
And local governments aren’t
providing financial incentives to
make the conversions more via-
ble for developers. The prevailing
thought seems to be that local
governments would rather ease
the permitting and zoning proc-
ess to undertake these projects
APARTMENTS FROM G1
Vacant o∞ces make good
homes — for the wealthy
PHOTOS BY KATHERINE FREY/THE WASHINGTON POSTThe Oxford building, which once housed IRS offices, a dentist’s office and a credit union, had
been sitting vacant for three years when Bethesda-based Varsity Investment Group scooped it up
in 20 17. It now features luxury apartments and common areas with commanding views of the
region. William and Sheila Hart, above, have a three-bedroom unit on the eighth floor.