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U.S. office-to-resi pipeline hits record high 

Developers are converting 71k units across the country, triple the amount in 2022

The Office-to-Resi Pipeline Has Never Been Stronger
(Getty)

It’s not just New York: office-to-residential conversions have never been more popular nationwide.

There are nearly 71,000 units in the office-to-apartment pipeline, according to data from RentCafe. That represents a record-breaking total in the firm’s tracking and a tripling of the number of units in the works only three years ago.

Office-to-apartment conversions are the most popular among real estate professionals seeking fresh uses for tired sites. Office-to-apartment plans account for 42 percent of future conversion projects, an increase from last year’s 38 percent share.

The largest pipeline in the nation belongs to New York City, where conversions are popping up on a regular basis. The Big Apple didn’t occupy the top spot last year — it belonged to Washington, D.C. — but leads the pack with 8,300 units in the works. More than 305 million square feet of office in the city is suitable for residential conversion.

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The nation’s capital dropped a spot to second in the overall volume of office-to-resi units in the pipeline. The top five is rounded out by Los Angeles, Chicago and Dallas, of which have at least 2,500 units in the works.

Conversions gained steam after the pandemic as the office needs of tenants declined, putting landlords in peril, and as the country faces a housing crisis.

But conversions are not simple solutions for developers – they have proven to be complex, from construction costs to the feasibility of retrofitting properties. There were more than 55,000 units in the pipeline at the start of last year, but only 3,700 deliveries by December.

To ease the burden, municipalities are offering incentives or paths towards accelerating the process. Tax exemptions are available to New York developers who guarantee at least a quarter of their properties will be affordable. 

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