Increase in office-to-apartment conversions | Diving into smart cities
- As the remote work trend continues, demand for office space has cooled across the country — and multi-family developers have stepped in to create new uses for these and other existing structures.
- Apartment conversions have increased by 25% in the two years since the start of the COVID-19 pandemic, with 28,000 new units on the market converted from other property types, according to a RentCafe report. The volume of new apartments only increased by 10% during the same period.
- Of that number, 11,090 new units are the product of office-to-apartment conversions, which grew by more than 40% between 2020 and 2021 — an all-time high, according to RentCafe. Another 77,000 adaptive reuse units are currently being converted.
Overview of the dive:
Washington, D.C. saw the most apartment conversions during this period, with 1,565 new adaptive reuse units in 2020 and 2021, more than double the deliveries between 2018 and 2019. Overall, Washington, DC has 5.6% of the country’s total adaptive reuse projects.
Seven existing properties in Washington were converted to multi-family housing in 2020 and 2021, according to Michelle Cretu, communications specialist for RentCafe. These projects, according to local radio WTOPto understand:
- Boathouse, a former Howard Johnson hotel located next to the Watergate Hotel, transformed into 250 apartments.
- The Wray, a former State Department building, converted to 158 units.
- Watermark, a former General Services Administration building, converted to 450 units.
- Walter Reed Parks, a planned community converted from Walter Reed Army Medical Center, with 168 multi-family units delivered to date and 2,200 units, including condos and townhouses, expected to complete construction .
Conversions in Washington, Philadelphia and Chicago accounted for 15% of all adaptive reuse projects nationwide between 2020 and 2021. Philadelphia gained 1,552 converted units during this period, while Chicago converted older buildings into 1,139 new apartments.
Office buildings are by far the most popular for conversion, which RentCafe attributes to the rise of hybrid and remote working, as well as developers’ desire to build “live-work-play” properties instead. entire office buildings.
“The architecture of the existing building is the critical starting point. Not all buildings are equally at risk from the work-from-home revolution,” said Doug Ressler, head of business intelligence at Yardi Matrix, the parent company of RentCafe, in the report. “Large office buildings in derelict central business districts are better suited for conversion than the often smaller office complexes scattered throughout the suburbs.”
Of the 77,000 units being converted across the country, RentCafe expects office conversions to account for 28% of projects. Hotels take second place with 22%, followed by factories with 16%.
Conversion activity has not slowed down at all in 2022; in July, 8,300 new adaptive reuse units were completed and opened for move-in this year. Los Angeles leads the nation in adaptive reuse construction for the first half of 2022 with 1,242 new deliveries — already the best year for adaptive reuse in the city’s history — and another 4,130 units in the pipeline. of construction.