Office-To-Resi Conversion Pipeline Balloons To Record 71,000 Units
In just three years, the number of apartments that could come from office conversions has almost tripled to a new high.
A record 70,700 new housing units are in the office conversion pipeline, 2025 figures from RentCafe show, up from 23,100 units planned in 2022.
The new high arrives as office owners struggle with stagnating rents and rising vacancy rates, plus demand for housing across the U.S. and local conversion incentives in some markets.
Converting office spaces to residential uses is the most popular category of adaptive reuse projects, making up 42% of the total 168,500 future conversion projects, according to RentCafe.
“As remote work continues to reshape the workplace and a significant share of the U.S. office space remains empty, repurposing offices into residential spaces offers a practical response to the growing need for housing,” RentCafe’s analysis says.
Conversions are also no longer confined to older buildings, likely because modern structures are closer to meeting existing building requirements and are easier to adapt, RentCafe found. While only 1.3% of completed conversions took place in properties built between 1990 and 2010, that era of buildings represents more than 7% of future projects.
Only a fraction of the pipeline is close to delivering — of 2024's 55,000-unit pipeline, just 4,000 apartments were actually completed.
“The carryover of pending projects from one year to another is quite large,” according to the RentCafe report. “This suggests that other factors like conversion feasibility, construction costs, and local incentives come into play.”
Whereas last year Washington, D.C., had more in the pipeline than any other market, New York City has surged ahead, with 8,310 conversion units on the board, according to RentCafe’s count. Office giants like SL Green and GFP Real Estate and smaller investors that made opportunistic acquisitions ramped up their acquisitions of properties ripe for conversion.
Their confidence in the projects was boosted by city- and state-level incentive programs and zoning changes last year designed to make more conversions permissible and less costly for developers.
D.C. now has the second-largest pipeline, at 6,533 units. The nation's capital introduced an incentive program offering a 20-year tax abatement for conversions as part of its Housing in Downtown program in 2022, with office conversions remaining a focus for Mayor Muriel Bowser's administration in recent months and attracting names like Related to the market.
Los Angeles has the third most units to be created by conversions, at 4,388, increasing by 80% from the prior year.
Other cities are also attempting to facilitate conversions via policy moves. San Francisco updated building codes and revised its planning code, as well as created a financing district to facilitate conversions, while Minneapolis removed requirements for public hearings for the projects.
