Office-to-Residential Conversions Surpass 80,000 Units
The national supply pipeline of office-to-residential conversions has reached a new high, with more than 80,000 units in development. While no specific projects have been announced for the Gold Coast, this trend signals a potential future supply increase in core urban markets.
- The number of apartments created from office conversions nationwide has surged, growing from 12,100 units in the pipeline in 2021 to an expected 70,700 in 2025. This strategy now accounts for the largest share of adaptive reuse development in the United States. - Major cities are incentivizing these projects to combat high office vacancy and housing shortages. New York leads with over 8,300 units planned, while Washington D.C. and Los Angeles have pipelines of more than 6,500 and 4,300 units, respectively. - In Chicago, the "LaSalle Street Reimagined" initiative is a key driver, using Tax Increment Financing (TIF) to help fund the conversion of downtown office buildings. This program supports several projects, including the redevelopment of 79 W. Monroe St., the first to break ground. - The Chicago metro area currently has a pipeline of roughly 3,600 new apartments from at least 11 planned office conversion projects. This represents a 28% year-over-year increase in the local conversion pipeline. - Notable Chicago projects include Golub & Co.'s plan to convert 16 floors at 30 N. LaSalle St. into 349 apartments and The Prime Group's project at 111 W. Monroe St., which will create 349 residential units alongside a hotel. - A significant feature of Chicago's publicly-funded conversions is an affordability requirement; for instance, the 79 W. Monroe project will have 41 of its 117 units designated as affordable. - While these conversions add much-needed housing, they come at a high cost, with retrofitting expenses ranging from $100 to over $500 per square foot, depending on the building's architecture and existing systems. - The federal government is also encouraging these projects through programs from HUD and the Department of Transportation, which offer low-cost financing, loan guarantees, and other incentives for conversions, particularly near public transit.
