A historic office building in downtown Boston is about to take on a very different role as developers move forward with plans to transform the property into 110 new apartments, adding another residential project to a city where the demand for housing continues to far exceed available supply.

Developers have secured $39.6 million in construction financing for the redevelopment of 31 Milk St., a nearly century-old building that contains approximately 86,730 square feet of space. The project is part of a growing wave of office-to-residential conversions taking place across Boston as developers look for new ways to bring housing into buildings that were originally designed for a very different commercial environment.

The completed project will feature 110 all-electric apartments, with 20% of the units planned to be income-restricted. That combination makes the redevelopment particularly notable as Boston continues looking for ways to increase housing supply while also creating more options for households that cannot afford the city's highest rents.

The project also demonstrates why adaptive reuse has become such an important part of the housing conversation.

Instead of constructing an entirely new apartment building, developers are taking an existing property and giving it a new purpose. That approach can preserve historic structures while adding housing in locations that already have streets, utilities, transportation connections, and established commercial activity.

For Boston, that matters.

The city continues to face a severe housing shortage, while the downtown office market has been dealing with the longer-term effects of remote and hybrid work. Converting underused office properties into apartments offers developers an opportunity to address both problems at the same time—bringing new residents downtown while putting older commercial buildings back into productive use.

The 20% income-restricted component is another important part of the project. Boston has been under growing pressure to create housing at different price points, particularly as high rents continue making it difficult for teachers, healthcare workers, young professionals, and other middle-income residents to live close to where they work.

The project is also expected to preserve the ground-floor U.S. Post Office, allowing an existing community service to remain in place while the upper portions of the building are transformed into residential space. That kind of mixed-use approach is increasingly becoming part of Boston's strategy for revitalizing older downtown properties.

For real estate investors and developers, the project offers another example of how the economics of Boston real estate are changing. Office buildings that may have struggled to attract traditional commercial tenants can potentially gain new value when converted into residential properties, although these projects can involve significant construction, financing, zoning, and design challenges.

The $39.6 million financing commitment suggests that lenders and investors continue to see opportunity in Boston housing despite elevated construction and borrowing costs. Developers are betting that strong demand for centrally located apartments will support the project once the new units come online.

And the location is difficult to ignore.

31 Milk St. sits in the heart of downtown Boston, placing future residents close to offices, restaurants, public transportation, entertainment, and other amenities. For renters who want an urban lifestyle without relying heavily on a car, projects like this can offer an attractive alternative to newer developments farther from the city center.

The redevelopment also highlights a broader trend that could become increasingly important throughout Massachusetts. As office demand continues to evolve, more aging commercial properties could eventually become candidates for residential conversion, particularly in communities where housing demand remains strong and developable land is limited.

Of course, one project won't solve Boston's housing shortage. The city needs thousands of additional homes, and converting existing offices can only address part of that demand. But projects like 31 Milk St. demonstrate how developers can look at existing buildings differently and find opportunities to create housing without starting from an empty lot.

For Boston's real estate market, that may be one of the most important stories behind the project.

The future of downtown Boston may not be exclusively commercial anymore. As office buildings are reconsidered, converted, and repositioned for residential use, the city is gradually creating a downtown where more people can actually live—not just work.