Many office buildings -- especially older, second-tier ones with high vacancy rates -- are struggling to attract tenants, and could be demolished or converted into residential spaces over the next decade.America’s office market is teetering on the edge of a massive shake-up as rising debt and the permanent shift to remote work leave countless office buildings across the country vacant and struggling.
Some of the hardest-hit properties are expected to be part of the growing trend of office-to-apartment conversions — a transformation that has taken off since the pandemic. In 2024, the number of office spaces being converted into apartments surged to 55,000, a staggering 357% jump from 2021, according to data from Yardi Matrix.
As more offices sit empty, the opportunity to repurpose these buildings is gaining steam. John Vavas, a real estate finance attorney with Polsinelli, says the conversion trend is here to stay.It is estimated that around 1.2 billion square feet of office space could potentially be converted into residential use, while a broader analysis suggests 1.38 billion square feet could undergo conversion over time.
In some cases, architects have had to cut holes in skyscrapers to rearrange interior layouts, but for landlords stuck with empty floors, the effort is worth it.