A Dallas real estate firm that wants to turn empty office buildings into housing is launching a new investment fund.
Bluelofts Inc. hopes to raise $100 million in equity to develop up to 3,000 workforce housing units in surplus office properties.
“We want to tackle multiple buildings in multiple markets and dedicate a good portion of those buildings to the workforce housing demographic,” Bluelofts’ Ike Bams said. “We believe there is a huge need for workforce housing for police officers, teachers, firefighters – regular people who have a job but cannot find any place to live.
“We also believe that with the excess supply of the office buildings there are incentives available to convert them to provide more housing.”
Bluelofts has spent the last five years working on office to residential building conversions in Dallas, Fort Worth and Cleveland.
Earlier this year, the real estate firm in partnerships acquired two landmark office towers in downtown Fort Worth – the 16-story Oil & Gas Building and the 19-story Star-Telegram Building. Bluelofts plans to turn vacant office space in the buildings into apartments.
Bams said the new Bluelofts Middle Income Housing Fund will be dedicated solely to workforce rental units. He said more than half of the apartments in each of the projects will be more affordable units.
“We have a few institutional investors already interested,” Bams said. “The office market is suffering right now and this is a perfect combination to provide housing for the working class demographic. The rents are not slowing down. It’s almost impossible to find affordable units to live in even if you have a good job.”
Just in Dallas alone, officials estimate the city needs another 20,000 affordable housing units to meet current needs. Housing advocates are pressuring the city to set aside millions of dollars from an upcoming bond program to help pay for more affordable living units.
Bluelofts partner John Williams said developers are hoping to get tax incentives and grants to help pay for new workforce housing projects.
“We think we are at the right place at the right time with this,” Williams said.
The nine conversion projects Bluelofts has so far lined up are in downtown locations, he said.
“In our pipeline of properties, we are also seeing some right outside the central business district,” Williams said. “We have several dozen properties that we have looked at.”
With office vacancy rates in North Texas near record highs, real estate developers and cities are exploring the feasibility of converting more empty offices into rental units. A handful of downtown Dallas office skyscrapers are already being redeveloped with housing, including Santander Tower, Energy Plaza and Bryan Tower.
