Applications are now open for a new grant that was recently approved by Hamilton City Council that sees the city provide financial support for feasibility studies and construction projects aimed at converting former downtown office spaces into residential or hotel units.
A city report says that the program, which was introduced as a pilot, has the aim of removing financial barriers associated with office conversions and mitigating future increases in the downtown office vacancy rate.
The city also wants to help “transition underutilized and vacant spaces into new housing and hotel opportunities, supporting downtown revitalization.”
Currently, the city’s office vacancy rate in Downtown Hamilton is 18 per cent, and staff expect that number to rise over the next two to three years as leases come up.
No new funding was required to implement the $2.5 million program as it will be funded from existing resources allocated to the Economic Development Division.
Staff say that retrofits required for office to residential conversions are often expensive, with upgrades required for electricity and plumbing and the unpredictability of potential additional costs.
They add that the cost to convert office space to residential generally costs $200 to $300 per square foot, with costs sometimes upward of $450 per square foot in some instances.
The owners of office buildings may submit a maximum of two applications per site under the program.
One application can be for funding in respect to feasibility studies required by the city as part of a Site Plan application.
The maximum grant available for feasibility studies is 50 per cent of the total cost of the studies to a maximum of $20,000, provided there is still enough funding available in the program.
For construction, building owners can receive a maximum of $10,000 per unit for a studio apartment, $12,500 for a one-bedroom unit, $15,000 for a two-bedroom, and $20,000 for a unit with three or more bedrooms.
Additionally, those interested in office to hotel conversions could be eligible for $10,000 per hotel room.
Units must be planned to be constructed in a privately owned building that contains a minimum of 5,000 square feet of purpose-built office space.
The building must also be in Downtown Hamilton, and the units must be located above the ground floor.
Those wishing to apply to the program can visit the City of Hamilton’s Invest in Hamilton website at investinhamilton.ca.
The pilot program was supported by the West End Home Builders’ Association (WE HBA), a group that represents 320 land development and residential construction companies across Hamilton, Burlington, and Grimsby.
However, Anthony Salemi, a Planner with the WE HBA told Council that they are “concerned there will be a lack of uptake due to the amounts proposed.”
For example, someone building a 300 square foot hotel room, assuming their costs are $300 per square foot, the unit could be upwards of $90,000 to construct, but they would only be eligible for $10,000 in construction funding (11 per cent of the total cost).
Meanwhile, the City of Calgary allocated $52.5 million to their office conversion grant program in 2024, and they aim to provide support for approximately 33 per cent of the average cost of conversion.
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