Empty Offices Converting to Homes
Empty office buildings in U.S. cities are increasingly being converted into apartments and condos in a "cubicles to kitchens" trend. The adaptive reuse projects are reshaping urban real estate and offering creative renovation inspiration for maximizing underused spaces, though the conversion process remains complex and slow.
- The pipeline for office-to-apartment conversions in the U.S. is projected to reach a record 70,700 units in 2025, a significant increase from 23,100 in 2022. Office conversions now represent 42% of all adaptive reuse projects for apartments. - As of early 2025, New York City leads the nation with 8,310 units in its conversion pipeline, a 59% increase from the previous year. Washington D.C. follows with 6,533 units, and Los Angeles has 4,388 units planned. - To encourage these projects, cities are offering significant financial incentives. Boston provides tax reductions of up to 75% for 25 years, and Washington, D.C. has a 20-year tax abatement program for downtown conversions that include affordable housing. New York's 467-m tax incentive and California's Infill Infrastructure Grant program also help make conversions more financially viable. - The cost of converting office space to residential units is substantial, typically ranging from $300,000 to over $500,000 per unit. For example, the average cost in San Francisco is around $531 per square foot. - A major architectural challenge in these conversions is the deep "core depth" of modern office buildings, which can make it difficult to provide adequate natural light and ventilation to all residential units. Retrofitting plumbing and electrical systems for individual apartments also adds significant complexity and cost. - One of the largest conversion projects in the U.S. is at 25 Water Street in New York City, where a 22-story office tower is being transformed into 1,263 apartments. In Chicago, the "LaSalle Street Reimagined" initiative is using tax-increment financing to help convert historic office buildings into residential units, with a requirement for affordable housing. - The trend is fueled by a high national office vacancy rate, which reached a record 20.7% in the second quarter of 2025 due to the rise of remote and hybrid work. Some cities are hit particularly hard, with San Francisco's office vacancy rate jumping to 27.7% from a pre-pandemic level of 8.6%. - While the trend is growing, the completion of these projects can be slow. Of the 55,339 office-to-apartment units that were in development in January 2024, only 3,709 were completed by the end of the year.
