US Office-to-Residential Pipeline Hits New High

- The national pipeline for office-to-apartment conversions has expanded dramatically, surging from 12,100 units in 2021 to a projected 70,700 in 2025. This type of adaptive reuse is now the most popular, making up 42% of all commercial-to-residential projects. - While Chicago is a key market, the trend is most prominent in New York City (8,310 units in the pipeline), Washington, D.C. (6,533 units), and Los Angeles (4,388 units). - Chicago's specific pipeline is set to deliver approximately 3,600 new apartments, a 28% increase from the previous year. Over 67.5 million square feet of office space in the Chicago metro is considered suitable for residential conversion, which is 18% of the total office inventory. - A primary driver of local projects is the "LaSalle Street Reimagined" initiative, which provides public financing to convert office space in the Loop. The program mandates that at least 30% of the resulting apartments be designated as affordable housing. - Your employer, Golub & Company, is a key participant in this trend, partnering on the redevelopment of 30 N. LaSalle St. The $130 million project will convert floors 3 through 18 into 349 residential units, 105 of which will be affordable. - Other major Chicago projects moving forward include the conversion of part of 111 W. Monroe St. into 349 residential units and a 226-key hotel, and the creation of 226 apartments at 208 S. LaSalle St. - The stark difference in market fundamentals fuels these conversions; in the first quarter of 2025, the national office vacancy rate was 19%, while the multifamily vacancy rate was only 4.8%. - The cost to retrofit an office building for residential use can be substantial, typically ranging from $100 to over $500 per square foot, depending on the building's structure and systems.