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Downtown London office building to become affordable housing

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A downtown London office building will be converted to apartments in an alliance that will see a developer work with an affordable housing agency and the area’s Anglican diocese.

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A downtown London office building will be converted to apartments, with some affordable units, in an alliance that will see a London developer work with a housing agency and the Anglican Diocese of Huron.

Sifton Properties will convert its office building at 195 Dufferin Ave. into 94 residential units, a mix of 80 one-bedroom and 14 two-bedroom units, with 40 per cent offered as affordable units, chief executive Richard Sifton said.

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Sifton first approached Homes Unlimited and the diocese as well as the city about a year-and-a-half ago and all have worked to make it happen, he said.

“We saw a need and we feel we have a responsibility to help, we wanted to be part of the solution,” Sifton said.

The building was more than 60 per cent occupied with office tenants when the company began considering conversion, he said.

“It’s a great opportunity, this is new and it is different. It is not easy to change the classification of a building.”

Construction is scheduled to begin as early as this summer with a goal to have the units occupied by the fall of 2025.

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 conversion will cost more than $20 million and Homes Unlimited hopes to receive city support as well as a loan from the Canada Mortgage Housing Corp., said Jim Foote, vice-president Homes Unlimited.

“It is an exciting project and a fantastic site, close to Victoria Park and all the amenities,” he said.

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“It created affordable housing by repurposing an existing space. The building will be totally reimagined and it will be very striking.”

Homes Unlimited London Inc. is London’s largest non-profit housing provider. It manages more than 650 housing units and is celebrating its 50th anniversary in the city. 

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

It is difficult to transition offices to apartments as the layout of an office is very different, but this building lends itself to a conversion, Sifton said. The building will need investments in new heating and cooling systems, windows and plumbing for all units.

“We did some layouts to ensure the feasibility and then we approached the partners. We all know there is a huge need for housing that is not upper end, these will not be premium spaces. We need a mix downtown,” Sifton said.

While 40 per cent of the units will rent for 70 per cent of market value, the balance will be close to market rents but smaller units, he said.

“They will not be a high price point,” Sifton said.

In addition to paying the diocese, rent income will also pay the mortgage to CMHC, Foote said.

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Sifton and Homes Unlimited are in talks with the city on tapping into a city fund to help with conversions. The city has created a $10-million fund to finance office conversions, with any one project eligible for a maximum $2 million grant.

“This shows you what is possible when people who own these buildings are interested,” and the city offers support, said Ward 13 Coun. David Ferreira, who represents the core.

“This is a very good sign. The downtown needs this. Three organizations have come together to help the city.”

The incentive would offer $20,777 for each one-bedroom unit and $28,155 for two-bedroom units to the $2 million maximum for each property. The incentives for what is called the office-to-residential (OTR) conversion grant program would be offered through the downtown community improvement plan. 

“This shows significant leadership from the Sifton organization. They recognize the need for affordable homes,” said Mike Wallace, executive director of the London Development Institute that represents builders.

The building will have to be “literally gutted” for the conversion, Wallace said.

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Two other developers in London are also looking to convert buildings in the core, he said. In addition new owners of the the former Rexall building at 166-170 Dundas St., on the northeast corner of Dundas and Richmond streets, announced they will convert the top three floors of that building into apartments. The building was bought in December by Maas Group.

 London has 4.8 million square feet of office space downtown and about a third of it is vacant

“St. Paul’s Cathedral and the Anglican Diocese of Huron recognize this as an environmentally and community leading choice for the property,” said Anglican Bishop Todd Townshend.

The city has a goal of creating 3,000 new affordable housing units in London.

 

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