Capital Shift: Office-To-Residential Conversions Accelerate In The DMV

Office-to-residential conversions have taken the nation’s capital by storm, with more than 6,500 residential units in the construction pipeline.

While Washington, D.C.’s multifamily market is faring well overall — even exceeding Mayor Muriel Bowser’s goal of building at least 36,000 residential units from 2019 to 2025 — it’s estimated that the D.C. metropolitan area will need a total of 320,000 housing units by 2030 to keep up with demand. 

As it stands, it’s on track to produce 100,000 fewer units than its projected target — making obsolete office space the perfect candidate to help solve this housing crunch. 

“The biggest opportunities we're seeing in the marketplace right now are purchasing office buildings at a fraction of replacement costs,” said Mychael Cohn, founder and CEO of Cohn Property Group, a DMV-focused real estate firm based in Bethesda, Maryland. “It's become a significant focus of our work because it directly addresses some of the most pronounced supply and demand imbalances in our market.”

Cohn said that after Covid, the DMV has experienced substantial oversupply of Class-B and Class-C office products, alongside significant undersupply of housing. Repositioning these assets allows the region to address both of these challenges simultaneously. 

Investors are seizing these opportunities in different ways, Cohn said. Some may opt to acquire office property at a reset basis, purchasing the property for such a low price that the property's value resets to what the new owner has paid, or covered land plays, where an investor purchases a property primarily for the value of the land, hoping value increases in the future.

Partial and total residential redevelopments using existing infrastructure are also strategies that investors are deploying to make these projects pencil, Cohn said.   

“From a capital perspective, office-to-residential redevelopments typically benefit from a reset basis on the acquisitions,” he said. “It's using existing infrastructure and expediting timelines relative to ground-up development, making it one of the most compelling value creation opportunities today.” 

It’s no coincidence that office repositioning projects make up a substantial portion of CPG’s recent work. Cohn said many local jurisdictions recognize that the best way to address D.C.’s growing need for housing is to incentivize existing office space to be redeveloped — ranging from expedited approvals to tax abatements.

In D.C., Bowser has launched initiatives to spur redevelopment, including the Housing in Downtown Program, which offers 20-year tax abatements for converting underutilized office space downtown to residential uses. Another incentive is the Office-To-Anything Program, which offers 15-year tax abatements to convert obsolete offices to retail and other nonresidential uses. 

Many neighboring jurisdictions, such as Prince William and Frederick counties, have launched their own economic policies to spur this type of development, Cohn said. These counties are now among the strongest growth markets in the DMV, he said, both offering a combination of affordability, expanding infrastructure and pro-growth local policies.

CPG’s recent work includes the sale of Hunter’s Branch, a 469K SF office in Fairfax, Virginia, to be converted to 485 apartments and 76 townhomes, as well as 4405 East West Highway in Bethesda, a 66K SF office building being redeveloped into a 10-story residential tower. It also includes income-producing assets such as The Alate in Old Town Alexandria.

Collectively, all of these transactions accounted for about $178M in volume for 2025, with an even more robust pipeline in 2026 and beyond, Cohn said.  

“These deals underscore a clear shift in where both capital and development interests are concentrated in the region,” he said. “There’s a preference for well-located sites that can be repositioned. Assets like these are emblematic of a broader trend, which is underperforming offices being repurposed and reimagined as high-quality residential and mixed-use developments. We are seeing institutional capital withdraw and local private investors step up to fill the gap.”

In Arlington County, Cohn said his team recently brought a multifamily development site to the market, dubbed Land Bay C at National Landing. National Landing is Virginia’s largest walkable community and within walking distance to Ronald Reagan National Airport. The community is home to almost 30,000 residents, 5,500 hotel rooms and more than 450 restaurants. 

Thanks to the property’s ideal location, a substantial level of interest in the site was shown, reinforcing that Northern Virginia is a top target for large-scale residential development and investment, Cohn said. 

To strengthen CPG’s development practice, Cohn brought in Josh Simon, who had previously been with Lee & Associates running its D.C. and Northern Virginia office.

Simon, who came on board as principal in late 2024, and Cohn have launched numerous development sites in Virginia, including a 10.5-acre site in Fairfax City and Connor Commerce Center in Manassas Park, and have plans to launch another 2.3-acre fully entitled multifamily site in Arlington next month.

“Multifamily equity has certainly been sitting on the sideline the last few years due to a variety of factors,” Simon said. “Equity demands, construction costs and, of course, availability of debt played a huge part, but we are feeling a big shift occurring right as we speak, and many of these groups appear to be hungry again and desire to be transactional.”

In addition to these projects, CPG’s other exclusive listings include 8618 Westwood Center Drive in Tysons Corner, a 110K SF office building on 5 acres, as well as Belle Haven Professional Center, a 97K SF office building in Alexandria that would work very well for a user-buyer, Simon said.

On the other side of the Potomac River in Frederick, Maryland, Cohn said CPG is assembling numerous large plots of land, including one large land position where 500 housing units — 250 townhomes and 250 apartments — are planned. CPG has about 4,000 residential units in various stages of zoning and entitlement in Frederick alone. 

In Montgomery County, CPG is actively working on multiple office positioning opportunities, all in different stages. These include 9190 Rockville Pike in Bethesda, 15901 Frederick Road in Rockville and 2 Research Place in Rockville. In the District itself, CPG has 600 E Street NW, a high-profile property in the Penn Quarter neighborhood, listed exclusively.

All of these projects, Cohn said, account for nearly $330M under agreement across a mix of land acquisitions, office repositioning, residential development and 1031 exchanges. 

“All of this activity is shaping for a very strong 2026,” Cohn said. “The depth and diversity of our pipeline positions 2026 to be our strongest year yet.” 

Cohn predicts that housing will remain a high-performing asset class in the DMV in 2026. Other asset classes, such as industrial — including small bay and last-mile facilities that support regional logistics — will continue to perform well. Additionally, outdoor storage is becoming more mainstream and gaining institutional acceptance, he said. 

But what ultimately differentiates CPG’s platform from other brokerages in the DMV? It sits at the intersection of land use, entitlement, strategy, underwriting and investment sales, Cohn said. 

“There are very few consulting groups that understand how zoning approvals, timing and land valuation interact with capital markets and disposition strategies,” he said. “This integrated perspective allows us to help owners and investors create business plans that not only deliver housing but also maximize long-term property value and investment outcomes.” 

This article was produced in collaboration between CPG and Studio B. Bisnow news staff was not involved in the production of this content.

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