It’s no secret that America is facing a housing crisis. Many states are dealing with a lack of affordable options for prospective buyers and renters. A range of factors including the pandemic, inflation and rising interest rates has cities facing an ancient economic problem: not enough supply to meet consumer demand. But a possible solution has presented itself.
According to a May 2024 report from RentCafe, Adaptive Reuse—the process of reusing an existing building for a purpose other than which it was originally built or designed for—is gaining in popularity, with developers updating and converting unused spaces into apartments. In 2023, 12,713 units were converted, a 7.6% increase from 2022. This trend is expected to continue. Currently, 151,000 apartments in repurposed buildings are in development nationwide.
While former office buildings are coming on strong with developers—they’re projected to the lead the way in the future—outdated hotels, equipped with essentials like plumbing and electrical systems, make up more than a third of adaptive reuse projects. Reimagined factories and warehouses account for the majority of the rest. Some intrepid developers have even converted old school buildings into multifamily units.
Adaptive reuse is also eco-friendly, according to Doug Ressler, manager of business intelligence at Yardi Matrix. “The process minimizes the environmental impact associated with demolition and the production of new materials, making it an eco-friendly approach to design and construction,” he said.
Manhattan currently leads the country in conversions, but Los Angeles is expected to take the top spot. Chicago, Philadelphia and Washington, D.C. round out the top five cities for adaptive reuse.
Adaptive reuse offers a chance for the preservation and integration of historic buildings and neighborhoods into the modern landscape. Older buildings are saved from demolition, slowing urban sprawl. But not every building qualifies. Developers must consider a number of factors, including market needs and pricing, before deciding whether a project is given the go ahead or not.