City hall spending $3.7M to help convert core office building into apartments

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A second office building in downtown London will be converted into housing thanks to city hall’s incentive dollars, Mayor Josh Morgan says.

Sifton Properties and Homes Unlimited will receive more than $3.7 million combined from the City of London to convert what’s now an office building at 195 Dufferin Ave. into 94 apartments – 80 one-bedroom and 14-two bedroom units, 10 of which will be affordable.

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“I’m incredibly pleased to see another successful applicant in this program,” Morgan said in a statement on Thursday. “We’re thrilled with the level of community interest and remain committed to filling vacant buildings in the downtown and supporting the construction of affordable homes for Londoners.”

The plan to convert the building, estimated to cost $20 million, was announced in April. The project is a partnership between London-based developer Sifton, the local non-profit housing provider Homes Unlimited, the Anglican Diocese of Huron, and St. Paul’s Cathedral.

The building, long home to IBM offices, is located steps from Richmond Row, across the street from St. Peter’s Basilica Catholic church.

The city’s $10-million office conversion program, intended to create 285 units, was announced by Morgan in January during his state of the city speech, and approved by city council in February. It’s funded by the $74 million awarded to the city in 2023 by the federal government under the Housing Accelerator Fund.

London hopes to address both an explosion in office vacancy rates – London recently had the highest downtown vacancy level in Canada, stemming from the pandemic shift to working from home – and to bolster the housing supply in a tight and expensive market.

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For every home created out of an office conversion within the downtown, the city provides a $35,000 grant to help offset the astronomical costs of retrofitting an office space to suit residential needs, such as expanded plumbing and building code-related changes.

A grant of $45,000 per unit is also awarded for the inclusion of affordable units, which Morgan explains will be secured for 25 years through an agreement that will come back to city council for approval. City hall has a goal of creating 3,000 new affordable housing units.

Morgan adds that “many of the other units” being offered by Homes Unlimited will be offered at an affordable rent, but is not requesting additional grant money.

Only one other project in the city’s downtown has received conversion funding. In May, the city granted $415,000 to Mississauga-based development company Maas Group, in order to create 14 two-bedroom and one single-bedroom apartments in the top three floors of the former Rexall building at 166-170 Dundas St., at Richmond Street.

Morgan has defended the slow uptake, saying city hall is constantly re-evaluating the incentives, and looking to help developers couple money with other grant programs.

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Industry leaders have said that while incentives are appreciated, London has a limited supply of available buildings that are suitable for conversion, and the process is still prohibitively expensive.

Sifton’s chief executive said in a statement that the partnership is an example of how a community can come together to achieve shared goals.

“We are pleased to be one of the first to receive funding under the Office to Residential CIP incentive program,” says Richard Sifton. “This contribution . . . will bring much-needed residential units to our core, while also reducing the amount of office space.”

Sifton has relocated commercial tenants to other sites to prepare the building for conversion. Sifton is donating the building and will oversee reconstruction for Homes Unlimited that will manage the site.

The diocese will continue to own the land and receive rent from Homes Unlimited for the building.

jmoulton@postmedia.com

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