A record number of office buildings will be converted into apartments in 2024 — here’s how many

This surge is a direct response to the remote and hybrid work revolution in the wake of 2020’s coronavirus outbreak, which has elevated vacancy rates for commercial spaces across many American cities. It also aims to ease high housing costs, worsened by languishing inflation, by creating more supply.

That’s all according to a recent study by RentCafe, which found a staggering 55,300 housing units are undergoing conversion from office buildings, marking a fourfold increase from 2021.

While the 22% year-over-year growth is more modest than the preceding two years, the demand for residential space remains a driving force behind this transformative movement.

Despite facing challenges such as higher financing costs and extended lead times associated with zoning and permitting, industry experts like Doug Ressler, the business intelligence manager at Yardi Matrix (RentCafe’s sister company), asserts that this trend is here to stay.

Local governments are incentivizing an increasing number of office buildings as they “sit empty in the wake of hybrid work and preferences for newer, more efficient office space” after the pandemic, Ressler told Time.

Specifically, these government initiatives aim to breathe new life into these spaces.

Leading the charge in 2024 is the Washington, DC, metropolitan area, where plans are underway to convert office space into 5,820 apartment units — an 88% increase from the previous year.

Following closely is the New York metro area, with 5,215 new apartments planned from former office spaces. Notably, New York’s growth is fueled by the transformation of 25 Water St. in Manhattan, previously a JPMorgan & Chase Co. outpost, into 1,263 apartments — the largest project of its kind in the country.

Dallas takes the third spot, with 3,163 housing units being crafted from offices, representing 83% of all types of conversions — the highest share among the top cities.

Boosted by the addition of nearly 140,000 jobs in November 2023, Dallas stands as a testament to the dynamism of this trend.

Meanwhile, Chicago, despite experiencing a 9% decline from last year, holds the fourth position.

The Windy City’s largest project, at 135 South LaSalle St., is set to yield approximately 430 units, constituting roughly a third of the city’s total from former corporate buildings.