Calls to repurpose ageing CBD offices into new homes have grown over the last two years, with Adelaide having among the highest rate of office vacancies in Australia and the lowest rental vacancy rate for housing.

It comes as businesses and corporations increasingly seek out new A-grade office space, leaving B, C and D grade stock vacant in a trend described as the “flight to quality”.

But Champion, who holds the Housing and Urban Development portfolio in the Malinauskas Government, told a CEDA conference on Wednesday that adaptive reuse of old office buildings is not a housing crisis solution.

“There’s an adaptive reuse of office buildings. Let me tell you, that is the biggest cul-de-sac,” he said.

“If anybody tells you that we can resolve issues by trying to fit out a D grade office in the city – it doesn’t work.

“There are huge costs involved. The floor place of these buildings are too big, there’s no provision for sewerage or water in them for living.

“So we need to focus the housing debate on things that will actually change the housing debate.”

It comes after the Capital City Committee, a joint forum of the state government and Adelaide City Council, announced last year it would spend $500,000 to investigate adaptive reuse of vacant “above shop premises” in the CBD.

The funding, split 50/50 between the council and government, is going towards auditing the city’s buildings and identifying which ones can be converted into housing.

“Above-shop premises” on Rundle Street. Photo: Thomas Kelsall/InDaily

A spokesperson for Champion’s office said the Minister’s adaptive reuse criticisms relate to big CBD office blocks and not the shop-top housing conversions being explored by the Capital City Committee.

Adelaide Lord Mayor Jane Lomax-Smith, one of the strongest advocates for adaptive reuse, said the council is “focused on vacant shop top and small-scale commercial buildings as they provide low hanging fruit in a severe housing crisis”.

“Having said that, the former Department for Transport building in Walkerville is now full of apartments and the former SGIC building on Waymouth Street and Treasury building next to Adelaide Town Hall are now hotels,” she said.

“It can be done. If we can put a man on the moon, we can put a family above a shop.”

Champion criticised adaptive reuse in response to a question about whether the government will change legislation to force vacant or abandoned homes to come onto the market.

An Australian Bureau of Statistics study published last year found there were 680 “inactive houses” in the Adelaide City Council area.

The self-described “experimental” study combined June 2021 census data with household electricity consumption, identifying homes where no power is being used.

Champion said vacant houses were “an issue but it’s not the issue” in terms of housing supply.

“Empty houses across Australia, it’s a great debate for the ABC to have or The Guardian to have, it’ll get everybody excited, it’ll generate a lot of attention same as adaptive reuse of office building, but actually it’s not terribly important for supply,” he said.

“What opens up supply is the same thing that has always opened up supply… it’s either houses or apartments and you just get on and build them – and that’s costly, but that’s what we’ve got to do.”

Adelaide City Council has set a goal to nearly double the CBD’s population to 50,000 people by 2036.

A council report published last year found three dozen 36-storey apartment towers could be needed by 2041 to house this level of population increase.

The Capital City Committee held a forum on adaptive reuse in May 2023 which heard that the Dutch capital of Amsterdam created 9500 new homes in 2022 through conversion of former offices, shops and commercial properties.

Amsterdam’s adaptive reuse peaked in 2020 when nearly 12,500 newly converted homes were brought online, the forum heard.