Adaptive reuse has been touted as a solution to help meet increased housing demand while giving empty office buildings a second chance at life. According to RentCafe’s report, 2019 and 2020 were peak years for adaptive reuse from offices to apartments; however, the number of projects converted in 2021 and 2022 did not match initial enthusiasm. Surprisingly, hotel-to-apartment conversions have done 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; it’s highly dependent on available stock and how compatible that stock is with conversion.” Offices present multiple challenges when considering adaptive reuse due to back-to-work mandates causing investors take wait-and see approach along with costs associated with structural changes needed for conversion compliance.
Hotel conversions are being driven by decline in previous markets which typically already have layout similar residential units reducing need extensive structural changes when converting as many are already zoned residential use leading more straightforward transformation plus delivering more affordable housing units – 54% low/middle income renters according report over last 3 years .
The future appears promising regarding upcoming projects indicating potential 63% increase currently 122k apartments undergoing conversion 45k office anticipated 37 % total expected come online through next few years only 25 % under construction vast majority planned or prospective phases .
