Developers continue to exercise their creativity when it comes to finding uses for outdated office and hotel space, turning many of these older buildings into new apartment units.
And according to the latest research from RentCafe, developers will continue to embrace the adaptive reuse of struggling office and hospitality properties.
According to a May report from RentCafe, developers converted commercial properties into 12,713 new apartment units in 2023. That is a jump of 17.6% from the prior year.
RentCafe says that this number will not be falling anytime soon. Relying on numbers from Yardi Matrix, RentCafe said that 151,000 new apartment units are in various stages of conversion, with 58,000 of those being repurposed from former office buildings.
But what about in the Midwest? What markets in the center of the country are seeing a boom in adaptive reuse projects?
Cincinnati, for one. RentCafe reported that in 2023, Cincinnati completed 342 apartments through retrofitting projects, good for fifth overall in the nation. Cincinnati also has 2,302 apartment conversions underway, good for the 11th largest pipeline of apartment conversions in the nation). Most of these conversions are coming from repurposed office spaces (74%).
Another strong performer in the Midwest? Cleveland. RentCafe reported that 282 new apartments entered the Cleveland market in 2023 through conversions of existing properties. That’s the 10th highest number of completed apartment conversions in the country.
Cleveland was the only adaptive reuse hotspot to maintain its momentum from 2022, when it saw 354 apartments created through repurposing, according to RentCafe. Adaptive reuse projects have been on the rise in Cleveland since the 1970s. The city has created more than 5,000 rental units by repurposing former office buildings, hotels and warehouses in the last half century.
Of course, office-to-apartment conversions aren’t the only example of this trend. Developers are also converting outdated hotels into apartments. In Overland Park, Kansas, developers turned old hotels into 220 new apartment units in 2023, good for the fifth-highest total in the nation.
Coming in sixth place was Sterling Heights, Michigan, which saw 213 new apartment units from converted hotels in 2023. Sterling Heights and Overland Park were the only Midwest markets rankingin the top 10 in this category of conversion.
Milwaukee ranked second in 2023 in the number of conversions from office spaces to apartments, with 216 last year. Indianapolis tied that city with the same number of office-to-apartment conversions, 216.
Cleveland came in sixth place with 202 such conversions, while Chicago notched 176 and Lansing, Michigan, 172.
