Adaptive reuse has been touted as a solution to help meet the increasing demand for housing while giving empty office buildings a second chance at life. According to RentCafe, 2019 and 2020 were peak years for adaptive reuse from offices to apartments; however, “the number of projects converted in 2021 and 2022 didn’t match the initial excitement,” said Andrea Neculae, author of the report. Surprisingly enough, hotel-to-apartment conversions did well in 2022 making up 29% of total inventory nationwide.
Neculae commented that one thing about adaptive reuse is that it’s not an abundance of abandoned buildings just waiting for transformation; rather it depends on available stock and how compatible it is with conversion. Offices have multiple challenges when considering adaptive reuse due to back-to-work mandates causing investors take a wait-and see approach as they anticipate waves of distress along with cost associated with conversion such as complying with housing requirements or accommodating multiple units’ sewage needs among other issues.
The decline in previous hotel markets has driven this wave forward according Neculae who stated hotels typically already have layouts similar residential buildings which reduces need extensive structural changes during transformation since many are already zoned for residential use leading more straightforward transition plus delivering more affordable housing units – 54% being repurposed low/middle income renters over last three years alone!
The future looks promising too according RentCafe’s report indicating potential 63% increase upcoming projects currently 122k apartments undergoing conversion 45k anticipated be office related 37%. Only quarter these future office conversions under construction vast majority planned prospective phases so plenty opportunity come!
