- Adaptive reuse apartments are growing faster than new apartments, up 25% in the last 2 years compared to the pre-pandemic period.
- Office-to-apartment conversions are at an all-time high, having made way for 11,000 apartments in the past two years alone.
- There are 77,000 apartments being converted, paving the way for an adaptive reuse boom in the coming years.
Over the past two years, apartment conversions have jumped 25% over the previous two years. Specifically, this increasingly popular real estate niche generated a total of 28,000 new rentals in 2020-2021, well above the pre-pandemic years of 2018-2019 when 22,300 apartments came into being through reuse. adaptive. Amid an ever-increasing need for housing, adaptive reuse has accelerated in America’s largest cities, according to the latest data from Yardi Matrix.
So, to fully grasp the scale of adaptive reuse growth in recent years, we compared the latest figures to the growth rate of traditional new apartment construction. Our analysis shows that adaptive reuse apartments grew faster than new apartments – 25% versus 10% – over the same period.
Office-to-apartment conversions hit record high
Office-to-apartment conversions grew even faster, jumping 43% in 2020-21 compared to 2018-2019, from 7,762 to 11,090 apartments created from former offices. Total conversions in 2020-21 represent an all-time high, with the repurposing of office buildings through adaptive reuse having taken an extraordinary leap not just in the past two years, but in the past decade as a whole, from just 2 700 apartments brought to life in 2010-2011. Legacy offices account for 40% of all adaptive reuse-to-lease conversions between 2020 and 2021, the highest share.
“The residential market needs a lot more density in areas of the biggest cities, where demand is greatest and where the tallest office buildings are,” said Doug Ressler, head of business intelligence at Yardi Matrix. “The architecture of the existing building is the critical starting point. Not all buildings are equally threatened by the work-from-home revolution. Large office buildings in derelict central business districts are better suited for conversion than the often smaller office complexes scattered throughout the suburbs.
Additionally, adaptive reuse apartments are set to experience impressive growth in the near future with over 77,000 apartments currently being converted. Indeed, 8,300 apartments have already been fitted out and opened to the public this year in July 2022.
Washington, DC leads in number of buildings redeveloped during pandemic
Washington, DC, Philadelphia and Chicago became hotbeds of adaptive reuse between 2020 and 2021. These three major cities alone accounted for 15% of total apartment conversions nationwide.
First, Washington, DC outpaced all other cities in adaptive reuse in the early years of the pandemic: the nation’s capital opened a total of 1,565 apartments by repurposing old buildings, nearly double the number converted here only two years ago. . With that, Washington, DC holds nearly 6% of total adaptive reuse projects in the United States.
Nearly matching Washington, DC in numbers, Philadelphia has maintained its record in conversion projects. The City of Brotherly Love has transformed older buildings into 1,552 new apartments in the past two years after a previous high of 1,854 between 2018 and 2019.
Meanwhile, despite leading the total number of conversions over the past decade, this time Chicago landed in third place with 1,139 apartments. The top 5 is completed by Cleveland and Pittsburgh with 837 and 814 converted apartments respectively.
Office buildings remain the dominant building type to adapt, but smaller niches are picking up the pace
The last two years have certainly demonstrated the potential for creating new housing from offices. This type of building reconversion dominates this period, constituting 40% of the housing transformed. However, with the rise of hybrid and remote working, developers are turning to a different type of makeover and choosing live/work/play development as a way to resurrect office buildings.
With 4,331 apartments, factories are the second most sought-after source of conversion. Between 2020-2021, factories accounted for 16% of adaptive reuse projects. As manufacturing continues to move overseas, many abandoned industrial spaces offer generous floor plans that provide an excellent transition to residential and mixed-use spaces.
That said, smaller niches are also emerging and growing at a rapid pace. Surprisingly, healthcare building conversions have actually seen the strongest growth during the pandemic. Indeed, adapted apartments in healthcare buildings more than tripled in 2020-2021 compared to 2018-2019, increasing by 212%.
Interestingly, religious buildings take second place in terms of popularity, with a growth of 73%. A small niche that only resulted in 311 converted apartments between 2018-2019, religious buildings that have been converted into residential spaces have given way to a total of 537 apartments over the past two years.
Finally, with 3,573 apartments in 2020-2021, hotels remain one of the most popular types of buildings to convert to rentals, registering a growth of 66% compared to 2018-2019. The direct transition from hotel rooms to apartments is one of the reasons why hotels remain one of the main sources of adaptive reuse.
Washington, DC and Chicago take the lead in office conversions
Washington DC is also a leader in converting offices into rental apartments. Between 2020 and 2021, the nation’s capital has successfully converted 1,147 units of former office space. A trend that has been popular even before the pandemicadaptive reuse has accelerated due to the large number of vacant offices in the city centre.
At the same time, a total of 732 new rental apartments in Chicago have been created through office conversions, with many more similar transformations to come. In particular, downtown Chicago seems to be the best place to tackle adaptive reuse projects – and the perfect example of this is LaSalle Street. And, with Millennium on LaSalle as a benchmark of success, the city of Chicago is take proposals to revitalize what was once an important part of Chicago’s central business district.
Philadelphia is next on our list with 590 apartments resulting from the office conversion. One City at 1401 Arch St is a great example of Philadelphia’s efforts to preserve and revive office buildings in the form of rental apartments. Former United Gas Improvement Company Headquarters Receives Award 2020 Preservation Excellence Award.
Millennium on LaSalle, Chicago
A city, Philadelphia
77,000 future apartments are expected to be converted in the next few years
The promising future of adaptive reuse is reflected in the impressive number of projects expected in the coming years, which once again confirms its growing popularity. To that end, Yardi Matrix data shows a total of 77,100 future adaptive reuse apartments in various stages of conversion. Of these, some are already being converted and are expected to be completed in 2022 and later, while other projects are awaiting approval or in the planning phase.
As for future plans, office conversions are expected to make up 28% of total apartments being converted – the largest share of any building type being converted, according to Yardi Matrix. Hotels represent the second largest share (22% of future projects), while factories (which represent 16% of the total) take third place.
Certainly, nowhere is the future development of adaptive reuse more noticeable than in Los Angeles. Here, a total of 4,130 apartments are expected to be created through conversions. Meanwhile, sporting far fewer upcoming projects, Cleveland, OH and Buffalo, NY joined the City of Angels on the podium with 2,654 and 1,984 apartments, respectively.
Los Angeles leads first-half 2022 apartment conversions
In terms of conversions completed from January to June 2022, Los Angeles is the top city with 1,242 apartments. That alone makes 2022 the best year ever for adaptive reuse in Los Angeles.
The top 10 cities with the most apartments converted in the first half of 2022 are:
|Los Angeles, CA||1,242|
- RentCafe.com is a national apartment search website that makes it easy for renters to find apartments and houses for rent in the United States. This report was compiled by the RentCafe research team based on apartment data provided by our sister company, Matrix Yardi.
- Adaptive reuse refers to the repurposing of an existing building into rental apartments. This study is based on apartment data related to buildings with 50 or more units.
- For this study, we analyzed the number of apartment conversions grouped by 2-year periods as follows: 2010-2011, 2012-2013, 2014-2015, 2016-2017, 2018-2019 and 2020-2021.
- 2022 conversion completions only include units from projects completed in the first six months of the year.
- Future projects include projects being converted, as well as planned and prospective redevelopments.
- Data is valid as of July 2022 and is subject to change.
- Yardi Matrix defines completed buildings as those that have received occupancy certification, while those under conversion have not yet received it or are under development. Planned projects are actively engaged in the redevelopment approval process, while potential redevelopments have a lower status in terms of likelihood of completion as they remain subject to rights approvals.
- Images courtesy of Yardi Matrix. All building photos are used with the express permission of Yardi Matrix.
Fair Use and Redistribution
We encourage and freely grant permission to reuse, host, or republish the research, graphics, and images presented in this article. In doing so, we ask that you credit our research by linking to RentCafe.com or this page, so your readers can learn more about this project, the research behind it, and its methodology. For more detailed and personalized data, please contact us at [email protected].