Last year marked the breakout for residential adaptive reuse projects across the U.S., as developers turned thousands of former commercial spaces into new apartment units. Conversions yielded 24,735 multifamily units nationwide, a sharp 50% increase from 2023 and nearly double the 12,765 completed in 2022, according to data from RentCafe.
Over the past decade, from 2015 through 2024, the number of conversions averaged about 15,199 units annually, though activity varied widely from year to year. The previous high point came in 2017 with 17,200 units, while just 10,490 were completed in 2018. Still, last year’s total stood out as the most active for conversions since at least 2010.
RentCafe’s analysis points to several factors driving the surge. Scarcity of developable land and high construction costs have made adaptive reuse more attractive in many metros. In dense or expensive markets, repurposing obsolete properties can cost significantly less than new construction while solving the challenge of underused buildings. With housing demand consistently high, many developers are finding that conversion projects offer a viable path to create much-needed supply.
Hotels emerged as the leading source of conversion material last year, responsible for 9,108 new units or 37% of the total. Office properties ranked second, representing 5,889 units or 24%, followed by industrial buildings with 4,816 units (19%) and schools contributing 1,960 units (8%). The remaining 12% came from other property types.
Hotels have proven especially conducive to reuse because their existing plumbing, electrical systems and heating infrastructure can be readily adapted for residential layouts. Offices, by contrast, pose more structural challenges due to their deep floor plates and limited window access, which complicate the addition of kitchens, bathrooms, and utility lines.
Even so, the office sector continues to play a major role. RentCafe found that about 70% of office-to-apartment conversions in 2024 came from Class A assets, compared with 28% from Class B and just 1% from Class C. Higher-quality buildings offer clear advantages—modern infrastructure, strong locations and better long-term financial returns. Developers aiming for luxury or higher-end apartment projects also tend to favor these properties, as premium rentals can help new projects achieve lease-up targets more quickly.
The momentum for reuse is still building. RentCafe reports that approximately 181,000 apartment units are now in planning or development stages, marking a 19% increase from the previous year. Of those, about 78,500 will come from former offices, followed by 35,800 from hotels and more than 31,000 from industrial buildings.
Chicago led the country in total converted apartment units last year with 880, followed by Denver (789), Philadelphia (761), Dallas (698), Manhattan (588), Minneapolis (574), Baltimore (550), Albany (546), Jacksonville (543) and Detroit (518).
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