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Conversions of commercial properties into apartments reached a peak last year.
Nationwide, 24,735 units came online in 2024 through the adaptive reuse of office properties and other commercial assets, according to a report from RentCafe analyzing apartment data from YardiMatrix. That was the highest amount since at least 2010 and a nearly 50 percent surge from 2023.
This trend is expected to continue, as about 181,000 units across the country are in the process of conversion, according to the firm. Most of those units — 78,500 of them — will stem from former office properties. Converted hotels will yield another 35,800 apartments, and converted industrial buildings will create another 31,000 units.
While conversions of office assets have dominated the news of late because of the Covid-19 pandemic and the rise of work-from-home norms, in 2023 hotels — facing pressures from climbing operating costs, shrinking profit margins and maturing debt — surpassed offices as the main source of apartment conversions.
In 2024, hotel-to-apartment conversions comprised about 37 percent of all adaptive reuse projects, leading to more than 9,100 new units, per RentCafe. This was a 46 percent increase from the year before and an all-time high.
Office was second with 24 percent, yielding 5,900 new units — a 34 percent increase versus the year prior. In third and fourth places were industrial (20 percent) and school (8 percent) conversions.
Last year, Chicago overtook Manhattan to become the metro with the highest number of apartment conversions, as 880 units came online in that city thanks to four converted properties.
Denver slid into the No. 2 spot. With 789 newly converted apartments in 2024, the city more than doubled its number of converted units from 2023.
Manhattan fell from first to fifth on the list of metros with the most converted apartment units, as developers delivered 588 converted apartments to the Big Apple last year. The units are part of the Pearl House conversion, one of the city’s largest office-to-residential conversions since the pandemic.