en.Wedoany.com Reported - The scale of office-to-residential conversion projects in the United States continues to expand, now accounting for 47% of all future adaptive reuse project plans nationwide, with 12 of the top 20 metropolitan areas hosting the majority of these projects.
Doug Ressler, Manager of Business Intelligence at Yardi Matrix, stated that the office-to-residential conversion pipeline already includes over 90,000 apartment units, a 28% year-over-year increase, nearly quadrupling the scale seen in 2022. "The scale is much larger than most people imagine, and it's accelerating faster," Ressler said.
According to data from Yardi's sister company RentCafe, New York City leads with 16,358 apartment units under conversion, roughly double that of Washington, D.C., and more than triple that of Chicago or Los Angeles. Ressler noted that the feasibility of conversions in New York is primarily driven by rental levels and capital markets; most conversion projects involve buildings constructed between 1960 and 1990, with smaller and narrower floor plates suitable for conversion.
The situation differs in Los Angeles, the second-largest city in the U.S. Ressler pointed out that Los Angeles has a complex building stock, with many older office buildings featuring deeper floor plates than those in New York, making conversions less feasible. Government policy is the main driver shaping the office-to-residential movement in Los Angeles. The Los Angeles Adaptive Reuse Ordinance, first passed in 1999, focused on downtown conversions and, by eliminating zoning and regulatory barriers, has created over 12,000 residential units from abandoned office and commercial buildings. Earlier this year, the ordinance was updated to a citywide approach, allowing administrative approval for the conversion of commercial buildings over 15 years old, as well as other buildings aged 5 to 15 years, covering offices, retail, hotels, and in some cases, parking structures. The new regulations "significantly streamline the approval process," permit flexible interior reconfiguration, and reduce or freeze parking requirements.
Ressler stated that Los Angeles' policy shift was also driven by housing shortages and an "office vacancy shock." He noted that Los Angeles has over 50 million square feet of vacant office space. According to the Conversion Feasibility Index (CFI) within the CommercialEdge suite, there are 1.9 billion square feet of office space nationwide suitable for conversion. The CFI uses a weighted scoring system to assess factors such as building age, area, depth, mid-block location, number of floors, floor plate shape, ceiling height, green building certification, walkability, and transit accessibility to determine suitability.
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