Based on a new report from RentCafe, it seems safe to say that converting office buildings for residential use is no longer just a kind of Hail Mary play to salvage a losing investment, but a valid development strategy — one that increasingly includes newer buildings.
According to the report, the number of apartments set to be converted from office spaces has more than tripled from 23,100 in 2022 to a record-breaking 70,700 in 2025. Office-to-apartment conversions are now the most popular type of adaptive use project, “At a national level, more than 1.2 billion square feet of office space (or 14.8% of office inventory) is considered suitable for conversion,” the report stated.
The shift to apartment use has been encouraged by the shortage of affordable housing. “More than just creating housing, this trend reflects a shift toward sustainable, community-focused urban spaces that cater to the evolving lifestyles and priorities of modern American cities,” RentCafe noted.
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At the same time, it said there is a significant carryover of projects from one year to the next, suggesting that conversion feasibility, construction costs and local incentives all influence the process. Only 3,709 of the 55,389 conversions in some phase of development in January 2024 were finished by the end of the year, leaving 51,630 to be completed in 2025. “This, combined with 19,021 new proposed conversions, represents a significant 28% year-over-year growth in the pipeline at the start of 2025,” it stated. “It’s clear that adaptive reuse is playing a key role in reshaping urban landscapes.”
The report also pointed to a notable shift toward reuse projects involving newer buildings constructed between the 1990s and the 2010s. Only 1.27% of such projects have been completed so far, but the future share is projected to rise to 7.03%. “This increase suggests a growing preference for repurposing newer structures (likely because they meet modern standards and are easier to adapt for new uses),” it commented.
Cities are also working to clear roadblocks to conversion, including financial incentives and streamlined processes.
The national leader in office-to-apartment conversions is the New York metro area, with 8,310 underway. In New York City, converted buildings with at least 25% affordable units can qualify for tax exemptions of up to 90%. Almost 46% of the metro’s total office inventory is suitable for such conversions, with the former global headquarters of Pfizer a leading example.
In Washington, DC 20-year tax abatements are offered for conversions through its Housing in Downtown initiative. Some 6,533 are in process, though only 14% of the metro’s inventory is suited for reuse. The Universal Buildings project is a key example.
Los Angeles has almost 4,400 units ready for conversion with about 25% of the metro’s office inventory suited for the process. The ARCO Tower redevelopment is a leading example.
In Chicago, 3,606 units are slated for conversion, 28% more than the previous year. A major project is 30 N La Salle St., where 432 new apartments, including 130 affordable units, will be carved out of a 432,000-square-foot space.
Dallas plans 2,720 office-to-apartment conversions. However, that is down 14% from 2024, likely because only 6.4% of its office space is suitable for conversion, compared to the national average of 14.8%.
Other metros in the top 10 are Atlanta, Minneapolis – which has simplified its approval process, as well as Charlotte, Cincinnati, and Ohio. The largest number of conversions are in the South, followed by the Northeast, the Midwest and the West. Four metros more than doubled their conversion rates: Boston, Jacksonville, Omaha, and Charlotte. But in three, the rates declined: Dallas, Cleveland, and Detroit.
“Repurposing office into residential spaces offers a practical response to the growing need for housing,” the report commented.
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