Office-To-Resi Conversions Up 28% From Last Year's Record Levels
At the start of 2026, 90,300 apartments were in the process of conversion from office space nationwide, a 28% increase from 70,600 at the same time last year.
Office conversions now account for 47% of future adaptive reuse projects nationwide, according to a new RentCafe report.
The number of units underway at the start of 2026 was almost four times the roughly 23,000 units being converted in 2022.
Part of the reason for this conversion boom is looming loan maturities. Roughly $213B in office loans — about a third of all U.S. office loans — are coming due by the end of this year, and those borrowers will need to pay them off or refinance them, Yardi Matrix senior analyst and Manager of Business Intelligence Doug Ressler said in a news release.
At the end of 2025, office vacancy nationwide was roughly 19%, according to CBRE.
"COVID-19 is to the office market what e-commerce was to retail," Yardi Research Director Peter Kolaczynski said in a statement. "As a result, there is simply too much office space in the market right now."
In search of ways to monetize their properties besides leasing them up with office tenants, conversions are an answer for some owners.
New York City is at the forefront of converting office buildings to apartments, with 16,358 rentals in the works. New York City's government has taken steps since 2023 to make the conversion process easier through interventions including tax incentives and citywide zoning reforms.
Washington, D.C., follows New York with 8,479 units underway. Chicago and Los Angeles, each with roughly 4,300 conversions, round out the top cities. All those cities have local initiatives to incentivize conversions, especially from office to residential uses, including tax increment financing in Chicago, adjusting land use regulations in Los Angeles and tax abatements in Washington.
