Originally published on August 24, 2024, by Veronica Grecu for NAIOP.
In 2023, the trend of transforming buildings into apartments saw a significant revival, nearing the peak levels of 2019 and 2020, as developers responded swiftly to the increased demand for housing after a two-year slowdown.
This resurgence resulted in 12,713 new apartments, marking a substantial 17.6% increase from the previous year. The momentum for adaptive reuse is expected to continue, with an estimated 151,000 rental apartments currently being converted, including 58,000 from former office spaces.
While office spaces are popular for future projects, hotel conversions dominated last year’s adaptive reuse landscape: A record 4,556 apartments emerged from repurposed hotels in 2023 alone, a 38.8% increase from the previous year and nearly double the output in 2021. This surge in hotel conversions is the most significant since 2016, with 3,061 apartments created.