Farhi plans more downtown office-to-housing conversions using city incentive

As London continues to face an affordable housing crisis, a prominent property owner is planning to convert more downtown office space into housing.

Farhi Holdings Corporation (FHC), which owns many downtown properties, says it will turn current commercial office space at 685 Richmond Street into 41 new housing units with just over 80 bedrooms in total.

The work is scheduled to finish in the first quarter of 2026, according to Ben Farhi, an executive with FHC.

"We've been marketing it for office space for the last couple of years with no luck due to changing environments in the downtown, so we've identified it as a solid office to residential conversion [opportunity], and we're in the process of completing construction in the next five to six months," Farhi said.

The project is the third of its kind to dip into the City of London's Office-to-Residential Community Improvement Project Incentive Program. Since 2024, the program has offered property owners willing to convert downtown office space into housing $35,000 per unit.

Sifton Properties is at work converting eight storeys of office space at 195 Dufferin Ave., across the street from the St. Peter's Cathedral Basilica, into 94 residential units, 40 per cent of which will have their cost of rent capped at 70 per cent of the market rate.

FHC retook ownership of 166 Dundas St., at the corner of Richmond, after Mississauga-based development company Maas Group said it would use the funds to convert 15 residential units. On Tuesday, FHC said the number of units would double to 32 with the intention to open in the first quarter of 2026.

Affordability encouraged, not required

So far, none of the units that have received municipal money have opened. According to city rules, the units do not have to be affordable, but can be sold or rented at market value. 

London Mayor Josh Morgan said it's up to developers to seek additional incentives, like one that offers $45,000 per affordable unit, which can be stacked on top of the office conversion incentive.

Morgan said the main function of the office conversion incentive is to turn London's vast stock of unused office space into "homes for people who can walk out of their front doors and support businesses."

"It's kind of a mix and match program where you can create some units at market rate rent, and you can access some of these other programs," said Morgan, pointing to Sifton's Dufferin Ave. conversion as an example of a partially affordable project. 

FHC's track record for bringing projects from planning to fruition isn't perfect, with no announcements yet on a long-approved 40-storey tower on Ridout, and a costly and lofty plan to turn the former London Free Press building into an entrepreneurship hub that spun its wheels before the building was eventually demolished. 

Still, Morgan said despite behind-the-scenes delays in procuring in-demand equipment and construction supplies, he's confident in the early 2026 estimate for the new units at 685 Richmond.

"There's already a lot of money invested in this space. We're talking about studding, drywall, plumbing. You're not going to walk away from that type of capital commitment. The way to recoup that money is to get rents," Morgan said.

Morgan said the units promised at 166 Dundas on a similar timeline have yet to be fully approved, and the extra 17 units haven't yet been folded into FHC's incentive agreement with the city.

"That takes time and we're working through that process."

In March, Sifton told CBC that converting office space to living space isn't as resource-intensive as building from scratch, but it can be both expensive and complicated.  

"The City's incentive program definitely helps us expedite some of these conversions," Farhi said.

"There's other cities in the country offering stronger incentives, but where things stand now, it's definitely helping. There's a $35,000 per unit incentive that could be topped up to $50,000 a unit," Farhi said. 

In July 2024, the maximum grant amount was increased from $28,000 per unit to $35,000 per unit.