Apartment conversion projects surged across the U.S. in 2024, characterized by both the volume and pace of adaptive reuse—where underperforming properties are redeveloped into multifamily residential units. According to a new RentCafe report, nearly 25,000 apartments were completed through adaptive reuse in 2024, representing a 50% increase compared to 2023 and double 2022’s output. This rapid pace reflects a major industry shift, as property owners respond to persistent economic pressures, changes in demand, and the continued impact of remote work on urban real estate.
Key Trends in Conversion Projects
The pipeline for adaptive reuse currently contains a record-breaking 180,585 apartments, up 19% over last year, with most conversions deriving from office space redevelopment. Hotels remained the dominant source for new apartments, accounting for more than 9,100 of the 24,700 converted units last year—a 46% increase from 2023.
Office conversions, while robust, showed a distinct preference for newer, high-quality buildings: 70% of new converted apartments in 2024 came from class A office buildings with superior infrastructure and desirable downtown locations suited for luxury apartments. Class B and C buildings contributed much less—28% and just 1%, respectively. School conversions accelerated faster than any other category, growing fourfold compared to 2023. This was attributed in part to falling student enrollment in urban areas and the financial challenges of preserving and renovating historic school buildings.
Regional and Sector Highlights
Chicago overtook Manhattan for the most apartments created through repurposed buildings, completing 880 units in 2024. Manhattan retained its lead in office-to-residential conversions, while Baltimore led hotel transformations. Denver doubled its conversion rate over the previous year and introduced an Adaptive Reuse Pilot Program to revitalize its central business district, especially from office-to-residential projects. Buffalo, NY, distinguished itself in the industrial reuse category with plans for 1,250 apartments from transforming 10 industrial buildings.
Forward-Looking Development
The adaptive reuse trend shows no sign of slowing, with 43% of upcoming units in the pipeline slated to come from office spaces (up from 38.5% in 2024). Hotel projects predictably compose the second largest share of future conversions, representing 20% (some 35,800 units), while industrial projects account for another 17%. Manhattan remains the top city with the most conversions planned, followed by Los Angeles, Chicago, and Washington, D.C.
Economic Drivers and Future Outlook
A combination of slimmer profit margins, heightened operating costs, and fluctuating demand—especially in the hotel sector—continues to push property owners toward adaptive reuse as a solution. Meanwhile, redevelopment is revitalizing city centers and neighborhoods, adapting to shifting market realities brought about by changes in work and lifestyle. As the RentCafe report emphasizes, the surge in adaptive reuse is not a short-term phenomenon but rather an ongoing evolution in American multifamily housing.
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