Of the 122,000 apartments currently undergoing conversion, 45,000 are the result of office repurposing, representing 37% of the total, followed by hotels (23% of future projects). Factories come in third place with 14% of the total.
In a significant development, former hotels experienced a record-breaking 2,954 new apartments resulting from conversion, a five-year high. This building type’s easier, more straightforward transformation path likely spurred a 43% increase in 2022 compared to 2021.
At the local level, Los Angeles leads the pack with 4,566 apartments expected to be created through conversion. New York City (3,987 apartments) and Chicago (3,519 apartments) rank second and third.
In 2022, the number of office conversions completed dropped by 15%, but interest in those projects remains high, and their number could rebound this year.
“Office-to-multifamily conversions target smaller, older properties, yielding limited sector effects,” says Doug Ressler, senior analyst and manager, Business Intelligence, Yardi Matrix. “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.”