According to data from CBRE, nearly 5,800 apartment units were delivered through office-to-residential conversions in 2023 across the top 20 U.S. markets.
This figure is expected to more than double to over 13,400 units in 2024.
Driving the trend is a significant decline in office occupancy and demand, particularly in central business districts, where hybrid and remote work models have left many buildings with high vacancy rates.
CBRE’s Phil Mobley notes that many cities are “doubling down” on conversion strategies to revitalise struggling downtowns while easing housing supply constraints.
New York City leads the way, with over 2,100 converted units completed last year and another 5,400 units currently under construction.
This spike has been fuelled by zoning amendments and tax incentives, alongside initiatives like the Midtown South rezoning and plans for the Financial District and Downtown Brooklyn.
Washington, D.C. and Chicago follow closely behind, supported by grants and streamlined planning frameworks.
In Washington, office vacancies now hover around 21.4%, making conversions a strategic urban renewal tool.
Chicago’s LaSalle Street Reimagined initiative has allocated more than USD$300 million in TIF (Tax Increment Financing) funds for converting ageing office towers into residential spaces, with an emphasis on affordable housing.
Other markets like Philadelphia, Boston, and San Francisco are also expanding pilot programs and offering financial incentives to catalyse conversions.
However, CBRE cautions that not all buildings are viable for redevelopment.
Floor plate size, window spacing, structural layout, and construction costs remain significant barriers.
While office conversions still account for a small proportion of total new housing supply, they are expected to play a growing role, particularly in dense urban centres with limited development-ready land.
CBRE anticipates further federal and local support will be crucial in scaling up efforts and offsetting high redevelopment costs.
