Adaptive reuse has been identified as a potential solution to help meet increased housing demand while providing empty office buildings with 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,” the report said. Surprisingly, hotel-to-apartment conversions did well in 2022 making up 29% of total inventory nationwide.
RentCafe’s Andrea Neculae commented that “one thing about adaptive reuse is that it’s not a cornucopia of abandoned buildings just waiting for transformation.” Neculae went on to explain that it is highly dependent on available stock and how compatible it is with conversion. Office building conversions have multiple challenges including incentives/tax reductions needed by developers revitalizing downtown areas plus cost associated with conversion such as complying with housing requirements, structural changes adhering to city regulations and accommodating multiple units’ sewage needs among others according to Neculae who authored the RentCafe report.
The decline in previous hotel markets has been found as catalyst driving current wave of hotel-to-apartment conversions due their similar layout (individual rooms/bathrooms) which reduces need for extensive structural changes when converting plus many are already zoned residential leading more straightforward transformation resulting in more affordable housing units – 54% being repurposed low or middle income renters over last three years per report findings from Neculae .
The future outlook appears promising according an anticipated 63% increase upcoming projects totaling 122K apartments currently undergoing conversion – office leading way (45K) followed by retail & industrial combined making up 37%. Of these future office conversions only 25% are under construction majority still planned or prospective phases per comments from Neculea indicating continued growth potential this sector going forward..
