Spend More Time At 'The Office' Without Becoming A Workaholic

Buildings across the country are being converted into residences as cities nationwide grapple with housing shortages that are pushing up the cost of renting or owning a home.

Of the roughly 122,000 apartment units now undergoing conversions, 45,000 are being repurposed from office spaces, according to a RentCafe analysis of Yardi Matrix data. A total of 10,090 apartments were converted last year.

Los Angeles leads the nation in office conversions for 2022. It also tops the list for the most converted apartments from any property type with 1,292 units. Converting offices into apartments is a trend that’s likely to continue in the City of Angels as the Los Angeles chapter of the American Institute of Architects is pushing to advance adaptive reuse projects citywide this year, especially in the downtown area.

Office conversions reached an all-time high in 2020 with 6,874 units coming online but lost their momentum in 2022, when just 3,390 apartments were completed in former office buildings. Office buildings still account for the highest share of all adaptive reuse projects at 34%, according to the report.

“The conversion of office spaces into multifamily units will primarily be restricted to smaller, older office properties due to factors such as construction costs and regulations related to residential construction,” said Doug Ressler, manager of business intelligence for Yardi Matrix.

Top Cities With Most Apartments Converted From Office In 2022

Source: RentCafe analysis of Yardi Matrix data

Converting hotels into apartment buildings is gaining in popularity, making up 29% of the inventory nationwide with 2,954 apartments. The decline in the hotel sector during the pandemic is a catalyst for the wave of makeovers, and the properties are easier to convert than office buildings.

In some cities, government incentives for downtown rejuvenation and historic building preservation are driving the rate of conversion. For example, tax credits for historic preservation in Missouri and Ohio have helped developers in Kansas City, St. Louis, Cincinnati and Cleveland have made the financing work for multiple conversions.

“Creative approaches are increasingly being sought to deliver net new affordable homes — leveraging of public assets, public financing tools, new legislative authorities, funding and, importantly, more solutions with the private sector,” Ressler said. “These solutions include corporate funding and deeper alignment with traditional multifamily housing developers and investors.”

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