As cities and towns across Canada age and evolve, old buildings become outdated or are no longer needed for their original purpose. Neighbourhoods also evolve - what was once a warehouse or industrial district near downtown becomes a trendy upscale place to live. What was the wrong side of the tracks is now the right side, meaning low-income housing is being replaced by upscale homes. One of the key issues facing cities and towns across Canada today is how to provide affordable housing.

Karine LeBlanc, Media Relations Officer with Canada Mortgage and Housing indicates that “CMHC provides provinces and territories with funds through the Investment in Affordable Housing program which gives them the flexibility to invest in a range of affordable housing programs and initiatives to meet local housing needs and priorities. Initiatives can include, for example, new construction, renovation, homeownership assistance, rent supplements, shelter allowances, and accommodations for victims of family violence.”

One way CMHC has identified to create more affordable housing is adapting old non-residential buildings into housing. While there are no specific limitations on the types of non-residential buildings that may be converted to residential use, certain types of buildings lend themselves more easily to conversion - old schools, hospitals, offices, motel and hotels buildings can be converted into apartments. Warehouses and factories are suitable for open concept live-work spaces.

CMHC studies identify seven advantages of converting non-residential buildings into housing including; construction costs are usually lower, housing is delivered faster, less stress and resistance from the neighbours, opportunity for historical preservation, neighbourhood revitalization and environmental friendliness given reuse of materials and building.

The key barriers to conversion from CMHC’s perspective may be; difficulty in obtaining traditional financing, additional time for design, land use changes and building permit approval, expensive environmental cleanup, loss of employment in community and unexpected problems in construction.

Lessons Learned From the Netherlands

One of the most objective and comprehensive studies of the feasibility of converting non-residential buildings into housing was conducted in 2014 in Europe. The “Adaptive reuse of office buildings: opportunities and risks of conversion to housing” study looked at 15 buildings in the Netherlands, all of which were office building conversions to housing.

The study found the advantages of conversions were, preservation of the unique heterogeneity of architecture in a neighbourhood, office buildings are constructed to carry more weight than housing, in most cases additional floors could be added to improve the economic feasibility of the project. In addition the study identified the reuse of a building that is vacant and derelict as positive outcome, as well as, adds diversity to the housing inventory of the community, which attracts new and diverse residents.

On the negative side the study showed, older buildings don’t meet modern building code, which often leads to major renovations to both the exterior and interior of building and residential buildings require more vertical shafts for electricity, water and plumbing than office buildings especially after 1965 when pre-stressed concrete was used which loses its strength when cut. Another major barriers were the fact that many older buildings lack parking, green space and balconies, all required to create attractive residential buildings. In addition, their low ceilings don’t allow for the higher ceilings that are the norm in modern residential development today. Like the CMHC study, the Netherlands research found cost overruns as a result of slow approval process and increased hours spent developing solutions to unforeseen problems as key issues faced in office building conversions.

Success Factors!

The authors concluded in all 15 cases, the success factors for the conversion of offices to residential buildings were - low purchasing price, adaptable floor plan, government subsidies, purchase and conversion by housing associations that in general work with long-term investment scenarios and do not require profit-maximization

A municipality may use several approaches to encourage the conversion of non-residential buildings for the purpose of affordable housing. These approaches include adopting flexible zoning policies such as those for mixed-use developments and live-work spaces and allowing residential conversions as a permitted or conditional use in appropriate commercial or industrial zones.

Other municipal led initiatives include, undertaking an inventory of vacant public and privately-owned buildings that may be suitable for conversion and notifying affordable housing providers about publicly owned, non-residential buildings that are suitable for conversion and offering these buildings to such providers on favourable terms.

Critical to successful adaptive reuse projects is providing technical assistance from building inspectors and planners to groups interested in converting non-residential buildings into affordable housing. And finally, providing tax exemptions, fee exemptions, waivers, reductions, grants or other financial incentives

CMHC Case Studies

Regina’s Renaissance Retirement Residence

In early 2005, the Derrick Building was an abandoned city-owned, five-storey office building in Regina, unoccupied for 15 years. By late 2006, it was transformed into a seven-storey seniors’ residence with a mix of market and affordable units. The conversion of the building into the Renaissance Retirement Residence was carried out by a private company with support from all three levels of government.

The project budget was $14.5 million ($92,357/door), financed through private investment, mortgage financing and $2.1 million from Canadian Association Heritage Professionals ($1,055,000 from CMHC and $845,000 from the Saskatchewan Housing Corporation). In addition, the City of Regina provided a five-year property tax exemption, valued at $211,000 as the project supported the City of Regina’s priorities of downtown revitalization and conversion of non-residential buildings into affordable housing.

The architectural firm of Alton Tangedal designed the converted building. Structural analysis showed that it would be possible to add two more stories to the five-storey building, thus improving the feasibility of the project.

The conversion retained the shell but fully gutted the interior, creating a total of 157 units (104 studio suites, 42 one-bedrooms and 11 two-bedrooms). In addition, there are two floors of common amenities’ space. The main floor has a lounge and reception area, while the downstairs has a large recreation area complete with a theatre, library and dance floor. In addition, outside there is an 800-square metre deck with gardens that the residents help maintain. There are only 25 parking spaces for residents.

A priority for new and repaired government-assisted housing under the Canadian Association of Heritage Professionals (CAHP) is improved energy efficiency to contribute to a greener environment and to lower costs for residents. This was achieved at the Renaissance Retirement Residence by incorporating 30 solar panels on the roof as well as a system of geothermal wells with 54 boreholes to a depth of close to 150 metres (500 feet). The integration of these two systems maximizes the seasonal efficiency of heating and hot water for the building.

The government assistance enabled 80 of the 157 units to be offered as affordable accommodation with optional assisted living services, renting at around 25 per cent below market rates. The Renaissance has been highly successful and currently has a long waiting list.

Salt Spring Island’s Murikami Gardens

On Salt Spring Island, a popular resort isle in British Columbia, a 27-affordable units housing complex was created by the conversion of an unused fish plant gifted by the Murakami family, long-term Island residents. The capital cost was $5,037,150 (or $186,561/door) in 2008.

Murikami Gardens wouldn’t have happened without CMHC provided seed funding and proposal development funding of $31,000, plus $648,000 in Rental Residential Rehabilitation Assistance Program monies. The Ministry of Housing and Social Development provided $1.8-million in interim construction financing and one-time grants totally $1,312,000. The Ministry of Energy, Mines and Petroleum Resources, through Community Action on Energy Efficiency (CAEE), provided $15,000 towards energy upgrading. The Murakami family provided $442,412 in land equity and a forgivable loan of $200,000. John Lefebrve provided a $500,000 interest-free loan for construction. The Capital Regional District provided $324,000 in Regional Housing Trust funding. Salt Spring Island Community Services contributed $110,000 cash and $104,738 in-kind donations. The Real Estate Foundation provided $50,000 while The Islands Trust approved zoning that allowed for higher than normal density.

Murikami Gardens has been a huge success since day one.

Thorold’s Welland Mills Centre

The Welland Mills Centre is an imaginative reuse of an old stone flour mill building located on 16-acre historic landmark site in downtown Thorold, Ontario. The building was converted into an 18-unit affordable housing development for singles and seniors by Keefer Developments Ltd with assistance from both the City and the Region.

The City waived $40,392 in development charges and provided $237,633 in municipal grants. The Region of Niagara waived $47,880 in development charges. With further funding from the Province and the federal government, as well as a $100,000 developer contribution, the Welland Mills Centre got built and officially opened its doors in 2006.

Completed in 2006, the total cost of the project was $2.2 million (or $122,222/door) and it continues to serve the community well.

Adaptive Reuse Requires Subsidies

While there are many examples of successful reuse of old buildings, many architects, engineers and developers caution that adaptive reuse is not a slam dunk every time. It is not a panacea for old neighbourhoods and it comes with significant risks, costs and compromises.

Barry Lester, retired VP at Stantec in Calgary, with extensive experience in historical building renovations, perhaps articulated it best when he said “The interesting thing about the reuse of old buildings is that in many cases, it ends up costing more than building something new. Usually very little of the original building is salvageable -the structure of course, and maybe the envelope or cladding. But most old mechanical and electrical systems don't work efficiently or don't meet new codes. And the finishes are all likely all to need replacement.

If one thinks in terms of construction costs, the structure is usually about 20% (or less) of the total building cost and the cladding (or envelope) may be another 10% provided that it is moisture and thermal-resistant. So the potential savings of using an older building versus a new, built-for-purpose facility are generally 30% or less. And this 30% savings can very quickly be eaten up by the inefficiencies inherent in fitting residential uses into a commercial or historical space and by the premium cost of renovation versus new construction.”

Lester concludes, “The argument must be made on some other inherent value of the older building such as heritage or community pride.”

Last Word

CMHC’s Leblanc cautions, “While some conversion projects, including the Renaissance Retirement Residence in Regina have been made possible in part, due to financial assistance from CMHC, the funding was part of other programs delivered by the Corporation and not a program specifically designed to support the conversion of non-residential buildings.”

Indeed it obvious from the three Canadian case studies that significant subsidies, heritage preservation and community pride are the key factors in adaptive reuse of old buildings into affordable housing. Where there is a will, there is a way!

Editor's Note: An edited version of this blog was published by Manasc Isaac Architects for publication in their Winter 2016 magazine reimagine titled " Reuse It or Lose It."

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