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Developers are transforming office towers into residential properties at another record clip, driven by the rise of remote work and a persistent housing shortage.
The number of office-to-apartment conversions hit a high at the start of the year, with some 90,300 apartments under construction across the United States, according to a new report from RentCafe. That figure represents a 28 percent jump year over year and a staggering 291 percent increase since 2022.
Among all adaptive reuse projects in the U.S., such as those including hotels and warehouses, office conversions increasingly make up a greater share of the projects. This year, offices account for 47 percent of the 193,900 future adaptive reuse units. That’s up from 42 percent last year, according to RentCafe’s report. Hotels make up 18 percent of the units, and industrial properties another 16 percent.
The office market has been slowly recovering from the pandemic, when scores of space were left vacant seemingly overnight. But the recovery has been uneven, with higher-end properties faring better. At the start of 2026, pricing for office properties across the country had ticked up by 1.5 percent.
One way developers have been grappling with the unused space has been repurposing it. As of June 2025, about 23.3 million square feet of office space is in the process of being converted to other uses or demolished, according to research from commercial real estate services firm CBRE. That is far more than the 12.7 million square feet of new supply that was expected at the time.
There has also been a change in the type of office buildings up for conversion, with developers increasingly opting for more recently built buildings. Newer office properties — those constructed between the 1990s and 2010s — comprise 2 percent of completed conversions, but they account for 6.4 percent of future projects.
But not all properties are prime for conversion, and the costs for conversion can be high. Many offices don’t have the right floor plates, ceiling heights or plumbing layouts for residential use, said Doug Ressler, manager of business intelligence with Yardi Matrix, RentCafe’s sister company. And developers have to take into account amenities and other changes to make the building feel like one someone would want to live in.
“You don’t want someone to walk into a building that looks like an office,” he said. “You want somebody to walk into a building that looks like an apartment complex.”
As for where the conversion movement is strongest, New York City remains the epicenter, with nearly 16,400 units in the pipeline — 97 percent more than last year. Among the projects underway in the Big Apple is Quantum Pacific and Metro Loft Management’s redevelopment of 845 Third Avenue, a 350,000-square-foot office tower the firms will turn into a 529-unit residential building. Washington, D.C., ranked second, with about 8,500 converted apartments under construction, up 30 percent year over year.
Helping both cities with conversion efforts? Their governments.
“D.C. and New York lead the pack in terms of developing programs to be able to not only find public funding but also to reduce the time to be able to permit something from beginning to end,” Ressler said.
Meanwhile, Philadelphia ranks No. 1 for having the greatest year-over-year spike in apartment conversions, of 119 percent. But some markets are seeing a pullback in conversions. Minneapolis is first in this regard, recording a 22 percent drop in conversions compared to the year prior.
It’s not just an East Coast trend: Chicago, Los Angeles and Dallas round out the top five markets for office-to-apartment conversions so far this year, also thanks to government initiatives.