Perhaps no real estate executive has transformed more Canadian boardrooms into bedrooms than Calgary’s Maxim Olshevsky, who visited Montreal to reveal the financing numbers he has achieved turning offices into homes in Alberta’s largest city.
Olshevsky, who heads Astra Group and Peoplefirst Developments, explained to attendees at the Quebec Apartment Investment Conference that the low prices for office properties in Calgary, a city that has long led Canadian markets for office vacancy rate, combine with municipal subsidies to make office-to-residential conversions far more workable than in other cities.
Downtown Calgary office properties could be purchased for as little as $75 to $85 per square foot, said Olshevsky, who said that in one instance his company purchased a building at a bargain price of $35 per square foot.
The city of Calgary offered subsidies of $75 per square foot to convert the offices into homes, allowing Astra Group to complete the transformation of the Lavalin building last summer and undertake another 600,000 square feet in downtown Calgary for an office conversion that his company currently has underway.
Calgary tries to expedite the conversion process by allowing developers to bypass the development permit application stage and the municipal administration also has a dedicated committee to support conversion projects and help them launch swiftly.
There are still some holdups. “They added a few extra hoops but at the end of the day it certainly helps because you can actually start a project really quickly,” Olshevsky said in the panel discussion.
Those seeking to convert office to housing in Calgary are also eligible for heritage preservation grants and energy retrofit funding from the province. “You can stack all of these grants on every one of your projects and it becomes quite feasible for developers to tackle a (conversion) project,” he said.
Some office structures are more difficult to transform into housing than others because of their floor plates but Olshevsky believes that most office structures can be made to work. “There are very few buildings that I have seen that are not convertible,” he told a crowd at the conference. “When you look at the exterior of the building, you can pretty much tell what kind of problems you are going to have or what your limitations are, so say there’s a building with an awkward floorplate you can pick up for $1, well, maybe you can make it work,” he said.
Difficult to replicate
Office towers are frequently equipped with a centre core bathroom section that does not lend itself to housing purposes but those spaces can be transformed into a variety of different amenities, from a yoga room, theatre room or coworking space. Olshevsky said he tries to avoid dedicating over 20% of any given floor to such purposes.
Some of the Calgary office buildings Olshevsky turned into homes are classified as heritage buildings, and those often require extra attention, such as a mechanical system that could cost $10 million to replace or asbestos removal for $5 million. “You have to take all of that into consideration,” he said.
The city of Calgary originally budgeted $153 million for the office conversion program until the money ran out. It then briefly reopened the program with an additional $53.5 million in funding as a way of dealing with the many downtown offices that had gone vacant as the city's vacancy rate soared to over 33% during the pandemic.
Olshevsky shared the panel with Charles Benoit Parent of CBRE Capital, Sébastien Gariepy of Groupe Inspire and Ben Lipowitz of Thornhill Capital Realty who noted that the same financing cannot currently be duplicated in Montreal where Class B- and C-rated office properties cost at least double the going rate in Calgary, about $150 to $200 per square foot, they said.
Also, office conversions in Quebec are not eligible for subsidies other than some heating and cooling retrofit grants. As a result, Montreal has seen only a handful of office conversion projects, including the former Standard Life tower on Sherbrooke Street undertaken by the Armoyan family, another on Nuns Island, a smaller project on Drummond and Sainte Catherine and another two blocks west.
Conversion by demolition
Toronto-based H&R, one of Canada's largest REITs with a $2.7 billion stock market value, has gone the demolition route for some of its high-vacancy office holdings.
In the third quarter, the REIT with 18% of its portfolio in office and 49% in residential, transferred two properties at 53 and 55 Yonge St. from investment properties to properties under development. Demolition started in the first quarter of 2025, and H&R continues to advance the rezoning process for the properties but has no plans to begin redeveloping them in the near future.
In October 2024, the REIT submitted applications to the city of Toronto for 53 and 55 Yonge St. as well as 145 Wellington St. W and 310 Front St. W to remove the current approved replacement office density and replace it with residential uses, including some affordable housing.
"H&R submitted these new applications given the changes in the office market over the past few years including the rise of hybrid work and reduced demand for office space," the REIT said in a corporate filing.
H&R has also submitted a rezoning application to replace the 12-storey office building at 330 Front St. W with a 65-storey mixed-use tower. The REIT has been focusing on selling office assets as it tries to focus on residential and industrial properties as part of a strategy first announced in 2021.
However, analysts with TD Securities said the market for those types of assets has slowed amid concerns about interest rates and the U.S. election.
"Retail property dispositions should be easier [to sell]," the analysts said in a report. "While disposing of the remaining office is a priority, we believe it has become easier to sell much of H&R's retail properties, which are mostly grocery-anchored/necessity-based."