Following the effects of the pandemic, adaptive reuse projects emerged as the solution to meet the increased demand for housing and revitalize struggling metros.
Though the number of projects converted in Chicago in 2022 didn’t quite match the peaks registered at the beginning of the pandemic, interest in transforming older buildings into residences remains strong, and the city is poised for a comeback, with the third-largest number of apartments expected to be converted in the coming year, according to a new report by RentCafe.
Chicago has 3,519 adaptive reuse units in the pipeline—a 200% jump compared to 2021, when future projects totaled 1,125—and the majority will be retrofitted office buildings. In fact, about half of the upcoming units will replace historic office buildings along the LaSalle Corridor, bringing new life to the area.
That said, less than 20% of the forthcoming projects in Chicago are already undergoing construction, and most of them remain in the planning stage, creating a stark contrast between expectation and reality. Although projecting a surge in adaptive reuse projects, the city only saw 68 transformed units in 2022, after being a hotspot between 2020 and 2021.
So what does the recent drop in numbers, coupled with the optimistic projections, mean for the future of this trend in Chicago? Will incentives give the niche a boost and help in the city’s continued revitalization efforts?
Yardi Matrix Senior Analyst & Manager of Business Intelligence Doug Ressler said, “The common factor shared across higher- and lower-demand metros is local government incentives for downtown rejuvenation and/or historic building preservation. For example, tax credits for historic building preservation in Missouri and Ohio have helped developers in Kansas City, St. Louis, Cincinnati and Cleveland make financing work for multiple downtown conversions.”
Office conversions are anticipated to account for the largest share of apartments under conversion, representing 37% of the total, according to RentCafe. Hotels are projected to hold the second-largest share, at 23% of future projects, while factories come in third place with 14% of the total.
