Apartments From Adaptive Reuse Projects to Exceed 120,000 in Upcoming Years, Despite Recent Slowdown in Office Conversions

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Following the effects of the pandemic, adaptive reuse emerged as the solution to the increased demand for housing and the rejuvenation of deserted downtown areas. While 2019 and 2020 were peak years for adaptive reuse, it appears that the number of projects converted in 2021 and 2022 didn’t match the initial excitement.

Even so, interest in converting older buildings into residences remains high. In fact, our analysis of Yardi Matrix data shows that adaptive reuse apartments are poised for impressive growth in the upcoming years. A whopping 122,000 rental apartments are currently undergoing conversion, 45,000 of which are the result of office repurposing.

30-Second Summary

  • A total of 10,090 apartments were converted in 2022.
  • In the same timeframe, the number of office conversions experienced a 15% slowdown, resulting in 3,390 apartments being retrofitted.
  • Former hotels experienced a significant surge, with a record-breaking 43% increase, transforming 2,954 apartments.
  • The future of adaptive reuse projects looks promising, with a projected 63% increase in upcoming projects. Currently, 122,000 apartments are undergoing conversion, with offices leading the way with 45,000 apartments expected.
  • Los Angeles remains a prominent hub for adaptive reuse, with notable projects also emerging in New York City and Chicago.


In contrast to the expected surge, apartments resulting from adaptive reuse experienced a slowdown in 2022 for the second consecutive year. Specifically, only 10,090 apartments were retrofitted — 12% fewer than just one year prior and 25% fewer than in 2020.

Furthermore, when looking at this slow-down, it seems that the most talked about adaptive reuse source is right at the heart of it — office buildings. With the office market stuck between the expectation that workers will return and the increasing popularity of hybrid work, office conversions hit their lowest point in 10 years.

On the other hand, adaptive reuse projects from former hotels picked up the pace, registering a five-year record.

doug ressler
“Office-to-multifamily conversions target smaller, older properties, yielding limited sector effects. Based on the latest research by CBRE, 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.”

– Doug Ressler,

Senior Analyst & Manager of Business Intelligence

Yardi Matrix


Ressler added, “Market conditions that favor such projects include significant multifamily demand or government incentives, specifically aimed at promoting historic restoration efforts, the same source shows. Construction costs and regulations on residential construction will continue to limit conversions to smaller, older office properties—whose floor plates make for an easier conversion—in markets with either high multifamily demand or government incentives aimed at historic restoration.”

Adaptive Reuse Trends Shift: While Office & Factory Conversions Cool Down, Hotels Thrive to 5-Year High

After registering an all-time high in 2020, with a record 6,874 units, office conversions lost their momentum in 2022. This year, 3,390 apartments came to life in repurposed office buildings. Despite the knock-back, this conversion type still makes up the highest share of all adaptive reuse projects at 34%.

At the same time, hotels gained popularity in 2022, making up 29% of the total inventory nationwide, with 2,954 apartments. In this case, the easier, more straightforward transformation of this building type guaranteed a 43% increase in 2022 compared to 2021 when 2,060 apartments were transformed from former hotels.

Notably, the decline of previous hotel markets has emerged as a significant catalyst behind the current wave of hotel makeovers. In 2022, we’re seeing the result of the drop in travel demand at the beginning of the pandemic. Specifically, hotel owners are dismissing cities like San Francisco and New York — once known for their bustling tourist activity, where occupancy declined considerably — thereby leaving room for redevelopers to take over.

Repurposing of former factories through adaptive reuse also registered a slowdown in 2022, with only 1,241 apartments resulting from this type of conversion. This marks a staggering 49% decrease from the previous year. However, the reason for this drop may lie in the limited stock and location. Usually found in areas that are zoned for industrial use, former factories can require special permits to convert them to residential. This, in turn, becomes a significant obstacle for developers.

Los Angeles Tops List of Cities for Apartment Conversions, Accounting for 13% of Adaptive Reuse Projects Nationwide

Interestingly, more than 20% of adaptive reuse projects finalized in 2022 are concentrated in three cities: Los Angeles, CA, Kissimmee, FL and Alexandria, VA.

LA is crowned this year’s conversion hub, holding 13% of adaptive reuse apartments nationwide. The 1,292 apartments that brought that new home smell into repurposed buildings made 2022 the best year for adaptive reuse in LA history.

Inching behind in second place is Kissimmee, FL, with 648 adaptive reuse projects. A majority (85%) came from former hotels turned into much-needed rentals. Granted, Osceola County has multiple incentives for adaptive reuse, that complement its many sustainability initiatives. Kissimmee and other cities in the county provide financial support to property owners and developers who are interested in undertaking adaptive reuse projects.

Alexandria, VA follows in third place, with 435 apartments, all of which came from office conversions. Meanwhile, the top five is rounded out by Baltimore, MD and Saint Louis, MO, with 395 and 354 converted apartments, respectively.

One surprise this year is that former hotspots for adaptive reuse — such as Washington, DC, Philadelphia, PA and Chicago, IL — didn’t even make our top 10 list, thereby leaving room for other Western and Midwestern cities.

LA Takes Lead in Office Conversions

The pandemic created a downturn for many downtown areas, and Los Angeles was no exception. As such, it comes as no surprise that the City of Angels transformed the most offices into residential in an effort to rejuvenate the area, with 692 apartments completed. And this trend doesn’t seem to stop here. The Los Angeles chapter of the American Institute of Architects is pushing to advance adaptive reuse citywide in 2023, especially in DTLA.

In fact, with a recent milestone in the city's DTLA 2040 Community Plan, the City Council approved a highly anticipated update to the Downtown Adaptive Reuse Ordinance, initially implemented in 1999. Namely, by expanding the scope of the ordinance, more commercial buildings will now qualify for a range of incentives, making the process of conversion even more accessible and efficient.

Office to apartment conversions made up 100% of the adaptive reuse projects in the next three cities on our list. Alexandria, VA takes second place overall with 435 former offices turned apartments. It seems that adaptive reuse is finding new life in Alexandria after 2021 brought no new projects to the market.

Baltimore, MD, on the other hand, continues its streak by raking up the same number of conversions in 2022 as it did in the previous year. It totaled 395 new apartments, all of which came from former offices. Cleaveland, OH is next on our list, with 354 apartments resulting from office conversions, followed by Lakewood, CO, with 218.

Projected Surge: Converted Apartments in Upcoming Years Estimated to Hit 6-Digit Mark

2022 doesn’t seem to mirror the future of adaptive reuse, as the outlook appears much more promising. Yardi Matrix data shows that a total of 122,000 apartments in different conversion stages are expected to enter the market in future years. That's a 63% increase compared to 2021, when future projects totaled 77,000. So, what does the recent drop in numbers, coupled with the optimistic projections surrounding adaptive reuse, mean for the future of this trend?

doug ressler
"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. These solutions include corporate funding and deeper alignment with traditional multifamily housing developers and investors."

- Doug Ressler

Senior Analyst & Manager of Business Intelligence

Yardi Matrix


Will incentives give adaptive reuse a much-needed boost and help in the revitalization of downtown areas? "The common factor shared across higher and lower-demand metros is local government incentives for downtown rejuvenation and/or historic building preservation," Ressler said. "For example, tax credits for historic building preservation in Missouri and Ohio have helped developers in Kansas City, St. Louis, Cincinnati, and Cleveland make financing work for multiple downtown conversions."

Looking at future projects, office conversions are anticipated to account for the largest share of apartments under conversion, representing 37% of the total, per Yardi Matrix data. Following closely behind, hotels are projected to hold the second-largest share, at 23% of future projects, while factories come in third place with 14% of the total.

At the city level, Los Angeles is predicted to continue to ride the adaptive reuse wave in future years, with 4,566 apartments expected to be created through conversion. Meanwhile, New York City, NY, and Chicago, IL take their places on the podium, albeit with fewer upcoming projects. New York is set to witness the creation of 3,987 apartments, while Chicago follows closely behind with 3,519 apartments.

What does Gensler's Steven Paynter Have to Say About the Future of Adaptive Reuse?

steven paynterA leading voice for adaptive reuse is Steven Paynter, Principal at Gensler, one of the world’s largest design and architecture firms. Here, he leads a studio of 40+ architects and designers on multiple projects that span large-scale master planning, new, ground-up buildings, and of course, complex adaptive reuse projects. We contacted him to get a clearer view of what is the future of adaptive reuse, beyond the data. Here is what he had to say:

After hitting a record high in 2020, office-to-apartment conversions are experiencing a decline. Were the numbers we saw in 2020 a result of a pandemic-induced hype or a resurgence we should expect to see again in the future? 

The projects that were done in 2020 would have been designed two to three years earlier because of the design and approval timeline. I believe there will be a huge boom in the next year and the year after, in terms of project starts and 2024-2027 in terms of project completions. A conversion project will probably take nine months to a year to design, in most cities, about a year to approve, and then at least two years of construction. So, the ones that began the design stage at the start of the pandemic won’t get delivered until 2025 – likely 2026 or 2027. It’s just an unfortunately slow process. One example is our 160 Water Street project located in New York. This 600-unit building was designed pre-pandemic, it struck construction about a year and a half ago, and it has about 8 months of construction left before the units get delivered. The process is different from that of renovating an office, where you can turn around in three months; it involves multiple years of construction and approvals.

We’ve done nearly 1000 conversion studies just at Gensler. About 150 of those have moved into design in different cities across North America. We’re expecting that by 2027-2028 to deliver upwards of 25 to 30 of these projects, and that’s just us. Cities like Chicago, San Francisco and Boston announced their programs and incentivize conversion projects. There’s already a kind of boom happening, and I think that will just increase as incentive programs from cities, states and federal will get aligned behind them.

What would make an office building impossible to convert?

What we’ve seen is that it actually varies a fair bit by market. What you can get away with in high-value markets like New York wouldn’t be possible in cities that don’t have a huge housing crisis. It also depends on the incentive programs. The big physical things are the floor plates, building height, and how many sides have windows, but there is a way to balance all these factors. There is no real kind of complete deal breaker. If you have one negative, you’ll need five positives to balance it out.

When it comes to these struggles of converting office buildings, is this something that developers will face in the future as the stock progresses to more newly built office buildings? Are they more difficult to convert?

The buildings that we’re seeing being converted right now are mostly built in the early to mid-70s, and there are a couple of reasons for that. First, they have a generally smaller floorplate, which is ideal for conversion. They generally have a lower floor-to-floor height, which still gives you 10-foot ceilings in residential, but it doesn’t mean you’re spending extra money on façade replacement, and they are buildings that are at the end of their lives as an office. Once a building comes up to about 50 years old, you’re looking at a large investment to replace or update the façade, the mechanical systems that will start to become obsolete, and you have to do a lot of work with asbestos abatement.  These buildings need a lot of reinvestment and that is leading developers and owners to say do we reinvest in try and make it offices or do we reinvest and make it residential? There is this sweet spot of buildings that are near the end of life and physically compatible with conversion, and that's the ones we're seeing. I don't think we'll see a lot of '90s and 2000s of buildings getting converted because they're still in demand as office.

Will office values sink enough to entice developers to convert this into new uses in the future?

It's not really about the overall value of the office market; it's the value and the kind of finance structure of the individual buildings that's making them appealing. So quite often, buildings that have been highly leveraged now have more debt than they can service with the number of tenants they've got. And once they've defaulted, they make a really appealing conversion project. We're seeing some buildings right now trading 50% less than what their book value was previously. One example is the Franklin Tower Project in Philadelphia, a headquarters building for one tenant that became 100% vacant overnight. That makes a good conversion candidate and an example of why it's not as much a market thing as it is individual buildings.

Will adaptive reuse become the key to creating more affordable housing?

People are seeing office conversions as a solution to empty offices, to bringing people back into downtowns. They’re seeing it as a climate solution as well because you’re retaining all the embodied carbon, so it’s already doing a lot of things. Trying to layer on affordable housing as well is trying to make it too much of a golden goose. You can’t expect it to solve every problem, and I think that’s where the cities have to step in and actually help with incentives.

When it comes to office buildings, they generally have a higher floor-to-floor height than new residential and they generally have larger ground floors and larger roof areas for terraces and amenities and that kind of stuff. We are seeing a lot of high-end condos or high-end rentals coming out of the conversion process.

Hotel conversions are beginning to compete with office conversions and they're for the first time in a while, they're almost neck and neck. How do you view hotel conversions in the future?

Hotels were built with a shallower core to window depth, which makes them quite easy to convert. Conversions to apartment from hotel that you're seeing, come as a result of the almost death of the hotel industry during Covid. And I think that will really drop off. As anyone who's tried to book a vacation recently will know, the cost of hotel stays is higher than it's ever been. And that's actually causing a lot of hotel brands that we're working with to come back and say we want to convert offices to hotels. So, I think that the number of hotels being converted to other uses is going to drop and the number of buildings converted to hotel is going to increase due to the hotel industry bouncing back pretty strongly from its worst moments during Covid.


  • is a nationwide apartment search website that enables renters to easily find apartments and houses for rent throughout the United States. This report was compiled by the RentCafe research team based on apartment data provided by our sister company, Yardi Matrix.
  • Adaptive reuse refers to repurposing an existing building into rental apartments. This study is based on apartment data related to buildings containing 50 or more units.
  • Data is subject to change. New properties and new markets can appear; some properties will not be completed or have the same status (besides completed) for multiple years; and some may not be completed - due to delays, sales, project abandonment, and so on.
  • Future projects include projects that are under conversion, as well as planned and prospective redevelopment.
  • Yardi Matrix defines completed buildings as those that have received a certification of occupancy, whereas those under conversion have yet to receive it or are currently being developed. Planned projects are actively engaged in the redevelopment approval process, while prospective redevelopments hold lower status in the probability of completion because they remain subject to entitlement approvals.

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Andreea Neculae is a creative writer at CoworkingCafe, with a passion for bringing human-interest stories to light. Writer by day and bookworm by night, she loves reading and reviewing anything from the classics to sci-fi and fantasy. Her writing skills are complemented by a special interest in graphic and web design. From research about the rental market to home décor and interior design, Andreea’s articles cover many layers of a renter’s universe. With an academic background in Language Arts, Andreea is always looking to develop new skills and further her knowledge.

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