The concept of converting older, obsolete office space into apartments and condos isn’t new. In fact, it’s been a popular way to revitalize large downtowns throughout the country—particularly along the East Coast, including Manhattan. However, what is new is that these conversions are now quickly expanding across other U.S. markets, such as the Midwest.
The CoStar Group released a 2015 report that found office-to-residential conversions are occurring in nearly half of the CBDs around the country, which could add about 11,500 new multifamily units to downtown inventories.
"Office conversions are a huge trend we're seeing in a lot of places you wouldn’t think of, including Kansas City, St. Louis, Milwaukee and Cleveland," said Aaron Jodka, former senior manager of market analytics at CoStar Portfolio Strategy, now Director of Research at Colliers.
Other cities actively tackling conversions include Cleveland, Dallas, Philadelphia, Baltimore, Cincinnati, Minneapolis/St. Paul and Richmond, Va.