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Real Estate Markets With Highest Office Conversions

Performance Property Real Estate Question

Q: I remember you saying that a good way to reduce the housing shortage is to convert unused office space to apartments. What areas are doing the most office conversions?

A: Yes, converting empty office spaces to residential units is a form of what’s called “adaptive reuse”. There are 2 ways to consider which local real estate markets are doing the most office to residential conversions: 1) the highest number of office conversions 2) the most conversions by % of office inventory.

The real estate market with the highest number of office to residential conversions is Los Angeles.

Los Angeles has been a trailblazer in adaptive reuse. In 1999, LA implemented an ordinance permitting developers to transform buildings into residential spaces in the downtown area. LA faces a stark lack of housing in its downtown, which is exacerbating the city’s homelessness problem. Adaptive reuse development conversion is one solution to the housing shortage by repurposing underutilized hotels, offices, and other commercial structures.

Cleveland, Ohio has the highest percentage of its total office inventory (11%) undergoing or planned for residential conversion. Thanks for your question, Kenny.

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