Office-to-Residential Conversion Feasibility Heatmap

Loan Analytics, LLC
13 hours ago
15 min read

Introduction

The rise of remote work and high office vacancy rates in many U.S. cities has spurred interest in office-to-residential conversion as a strategy to revitalize downtowns and add housing. Adaptive reuse of vacant office buildings can save time and cost compared to new construction by reusing the building’s structure, elevators, and other components. However, commercial real estate conversion is not a one-size-fits-all solution. Only an estimated 15% of U.S. office space (about 1.25 billion square feet) is considered a strong candidate for conversion under favorable conditions. Many offices – especially newer or oversized buildings – face significant design and financial hurdles that make conversion infeasible without major modifications or subsidies.

This report provides a “feasibility heatmap” of office-to-residential conversion potential across major U.S. metro areas. It ranks cities by how conducive their office building stock is to conversion, based on factors like floorplate size, building vintage, and local residential rent levels. We also examine the economic, regulatory, and design constraints influencing conversion feasibility. Policy makers, investors, and developers can use this analysis to identify which cities and building types are most conversion-friendly – and understand what obstacles need to be addressed in less feasible cases. Key terms such as adaptive reuse, vacant office conversion, and conversion feasibility are used throughout to align with common industry discussion and SEO search interest.

Key Factors Affecting Conversion Feasibility

Multiple factors determine whether a given office building can be successfully converted into housing. Below we outline the primary feasibility filters – physical design traits, economic conditions, and regulatory considerations – that influence conversion viability.

Floorplate Depth (Shallow vs. Deep Floorplates)

One critical design factor is the floorplate size – essentially the depth of the building from the exterior windows to the interior core. Shallow floorplates (e.g. narrower office buildings) are much easier to convert to residences. In a residential layout, units need windows for light and ventilation, so a building with a shallow floorplate can accommodate apartments along the perimeter walls with windows for each unit. Older office buildings often have these smaller floorplates and central cores, allowing natural light to reach most of the floor area. By contrast, deep floorplate offices (common in modern towers) have large expanses of interior space far from any window, making it difficult to lay out apartments without leaving substantial windowless space unused. Converting a deep office may require drastic solutions like cutting an atrium/lightwell into the building or relegating interior areas to communal or non-residential use – steps that add cost and complexity.

A recent analysis of office conversions confirms that floorplate challenges are a major limiting factor. Gensler, an architecture firm specializing in reuse design, found fewer than 20% of office buildings in most cities are ideal conversion candidates, largely because many have floorplans too deep or layouts incompatible with residential needs. Similarly, CommercialEdge’s national study found only 2.7% of office buildings scored as “Tier I” easy conversion candidates (generally those with favorable shallow floor plans), with another ~12% “Tier II” that have potential but might need significant modifications. In other words, more than 85% of offices have features – often large or odd-shaped floorplates – that make conversion difficult without major redesign.

Innovative design approaches can mitigate some floorplate issues. For example, a joint Pew/Gensler study explored converting very large-floorplate offices into micro-apartments: small “co-living” units placed around the perimeter (near windows) with shared kitchens, bathrooms, and living spaces in the deep interior core. This dormitory-style concept uses the window-accessible areas for tiny units and turns the windowless center into common amenities, allowing even hulking office floors to function as housing. Such approaches can increase the feasibility of deep buildings, but they often target niche markets (e.g. student or affordable housing) and still require regulatory leeway and public subsidies to pencil out.

Takeaway: Buildings with shallow floorplates and regular layouts are prime candidates for conversion, whereas those with very deep or irregular floorplates pose major design challenges. Creative layouts like perimeter micro-units can help repurpose some deep-plan buildings, but typically at the cost of reduced unit size or the need for shared facilities.

Building Vintage and Design Characteristics

The age and vintage of an office building strongly correlates with conversion potential. Older buildings (pre-war early 20th century or mid-century constructions) often have attributes that lend themselves to residential use, while many newer offices (1980s–2000s) were designed in ways that hinder conversion:

Pre-War and Early/Mid-20th Century Buildings: Offices built before about 1960 tend to be smaller in scale, with load-bearing wall structures or central corridors, operable windows, and ornamental facades. These older structures usually feature the smaller floor plates, central cores, and ample window access noted earlier. Many also have architectural character that can add value as unique residential lofts. In fact, a large share of successful office-to-apartment conversions to date come from this vintage. In 2024, among 60 U.S. office buildings converted to apartments, 23 were originally built before 1930. Historic buildings that are functionally obsolete as offices (e.g., lacking modern tech infrastructure or efficient HVAC) can often be bought at a discount and reborn as desirable apartments with historic charm.
Post-War (1950-1980) and Early Modern Offices: Buildings from the 1960s through 1980s form the second big wave of conversion candidates. Many in this era are reaching 40–60 years old and suffer from physical or economic obsolescence – dated aesthetics, aging systems, or locations out of favor with office tenants. While some late-20th-century offices do have relatively large floorplates, they often have some convertible features (like regular grids that can be re-partitioned, or concrete frames that support adding plumbing). Notably, data show a bimodal distribution of converted office building ages: one cluster in pre-1930s, and another in the 1960–1990 range. In the 2024 sample, 25 converted buildings were originally built 1960–1990, indicating this era’s structures are increasingly being repurposed. These mid-century buildings might not be as intrinsically charming as pre-war ones, but if they are structurally sound, conversion can be cheaper than demolition and starting new – especially since many will need major system upgrades soon regardless.
Recent (1980s–2000s) Office Buildings: Offices built in the last few decades tend to feature large, open floorplates, extensive glass curtain walls, and deep centralized HVAC cores, making them least suited for residential reuse. Only 5 of the 60 office buildings converted in 2024 were constructed after 1990. Modern Class A towers often have vast floor spans with window walls only at the perimeter, which is ideal for open-plan offices but problematic for apartments as described. Additionally, many newer offices are still competitively viable for tenants (or were until recently), so their values may not have fallen enough to justify a conversion to lower-rent residential use. These buildings typically fall into “Tier III” in feasibility scoring – possible to convert in theory, but with “significant challenges and limitations”. Unless office market prices crash very steeply or incentives heavily offset costs, most post-2000 towers will not be converted in the near term.

Overall, older and smaller buildings dominate the pool of feasible conversions. They have the right bones for adaptive reuse – manageable size, lots of windows, and sometimes central courtyards or light wells that ensure every potential apartment can have natural light. Newer offices with massive floorplates or all-glass exteriors might require extreme makeovers (or waiting until they, too, become “obsolete” enough that conversion is the last resort). Encouragingly, many U.S. cities have plenty of aging mid-century offices that could be repositioned as housing. For example, in Chicago, about half of the office space deemed top-tier for conversion is concentrated in the historic downtown Loop, where many early-20th-century high-rises now sit underutilized. Similarly, New York City found that nearly 50% of its office stock across the five boroughs could qualify as Tier I or II conversion candidates – much of it in buildings built before 1990, which the city is now targeting for adaptive reuse programs.

Residential Rent Levels and Economic Viability

Even if a building’s physical design is suitable, economic feasibility ultimately depends on whether the cost of conversion can be justified by the residential rents or sale prices after conversion. Higher local housing prices make conversion projects more viable by increasing the potential return on investment once the building is filled with tenants or condo owners. Conversely, in markets with low rents, a developer may find that even after spending tens of millions to convert an office, the apartments’ value will not recoup the cost. Thus, cities with strong housing demand and high rents are generally more attractive for office-to-residential conversions.

This dynamic is evident in where conversions are taking off. Manhattan (NYC) – which has extremely high apartment rents – leads the nation with over 53% of its office buildings rated as good candidates for residential conversion. Other expensive housing markets like San Francisco, Los Angeles, Boston, and Seattle also rank among the top in conversion potential (each with roughly 25–30% of office stock seen as feasible for reuse). In these cities, the rental income from new apartments (often luxury or at least market-rate units) can offset the substantial construction costs. By contrast, in many Sun Belt or Midwestern cities with lower rent profiles, fewer offices pencil out for conversion without subsidies – even if the physical opportunity exists. For instance, Chicago has a large amount of convertible office space by square footage (second only to NYC), but its average rents are lower than coastal cities, which may explain why only 18.6% of Chicago’s office buildings are classified as strong conversion candidates in one index. Miami, with its growing population and rising rents, has about 16% of offices rated as conversion-suitable – notably higher than many peer cities in the South, thanks to its robust housing demand.

Economic feasibility also hinges on the cost side of the equation. Conversion can be cheaper than ground-up construction in some respects – studies show adaptive reuse projects can deliver units at ~20–30% lower cost than new builds, partly by saving time and materials. However, there are significant expenses unique to conversions: installing all-new plumbing and bathrooms in a former office, meeting modern residential building codes (fire sprinklers, insulation, egress requirements), possibly abating asbestos or lead in older structures, and upgrading HVAC for 24/7 habitation use. High construction costs and financing rates have recently slowed many projects, even in high-rent cities. For example, in San Francisco, developers have been reluctant to pursue conversions despite a glut of empty offices and very pricey housing, because the math still doesn’t work without incentives – initial efforts to waive some fees and taxes had “drew less interest than expected,” leading the city to propose deeper subsidies and relaxed affordable housing requirements for conversions. This underlines that residential rent alone isn’t enough in some cases; public-sector support may be needed to bridge the gap between conversion costs and expected income.

Takeaway: Strong housing markets (high rents) improve conversion viability, but cost challenges remain significant. The most feasible projects often occur when an office building’s value has fallen sharply (reducing acquisition cost) and the local residential prices are high. In softer housing markets, conversions usually require either a very cheap office acquisition or public incentives (or both) to make financial sense. Policymakers interested in conversions often look at offering tax credits, low-interest financing, or grants to close this “feasibility gap” in lower-rent cities.

Regulatory and Zoning Constraints

Local regulations, zoning laws, and building codes can greatly influence conversion feasibility – either easing the path or posing obstacles. Key regulatory factors include:

Zoning and Land Use Flexibility: Some downtown zones may not permit residential use, or might cap the number of dwelling units, require excessive parking, etc. Cities that have adjusted zoning to allow residential in former commercial districts see more conversions. For example, New York City convened an Office Adaptive Reuse Task Force which recommended zoning changes to facilitate converting most office buildings built before 1990 to residential use. Following these recommendations, NYC launched a 2023 Office Conversion Accelerator program and is pursuing state law changes to open up more buildings for conversion. Los Angeles similarly expanded its Adaptive Reuse Ordinance citywide in 2024 to make all older office buildings eligible for conversion, after an earlier version only covered pre-1974 buildings. Cities like these that proactively loosen zoning (and streamline permitting) for conversions have a much larger pipeline of projects.
Building Codes and Design Standards: Converting to residential can trigger different code requirements that didn’t apply to the building in its office life. This can include mandates for things like larger window openings, more bathrooms, or even recreational space. In some cases, codes written for new residential construction don’t map well to an office building’s realities. A case in point: New York’s building code previously required all residential buildings to have a certain amount of open rooftop recreation space. Many older office towers lack usable roof decks, so this rule would automatically derail conversions. Recognizing this, NYC’s task force pushed for more flexible recreation space requirements (e.g. allowing indoor amenity rooms instead of open roof decks) specifically to accommodate office-to-housing projects. Cities that audit their building codes for undue barriers – like mandates on window dimensions, corridor lengths, or parking minimums – and create exemptions or alternative compliance paths for reuse projects will see higher feasibility. Seattle, Denver, and Minneapolis have been noted as cities that eliminated certain regulatory barriers (such as minimum unit sizes or parking requirements), which makes creative conversions like micro-apartments more achievable.
Permitting Process and Incentives: Lengthy, uncertain approval processes can kill conversion economics by adding delay and risk. Some cities have addressed this by fast-tracking conversion permits or offering tax abatements. Washington, D.C., for example, launched a “Housing in Downtown” program – a $42 million fund providing 20-year property tax abatements for downtown office-to-residential conversions that include affordable units. This effectively subsidizes conversions in the capital, where about 90% of the central business district is commercial and vacancies hit record highs. Other cities like Dallas offer historic preservation tax incentives if the office building is landmark-eligible and converted to housing. And at the state level, California put $400 million toward grants for commercial-to-residential conversions in 2022, recognizing the statewide interest in repurposing unused offices. These policy moves can tip marginal projects into feasibility by offsetting costs or simplifying approvals.

In summary, regulatory context can make or break a conversion project. Cities serious about promoting adaptive reuse are updating zoning to allow mixed uses, tweaking building codes to reflect the realities of older office structures, and offering financial carrots to encourage developers. On the flip side, cities with rigid codes, restrictive zoning, or no incentive programs may find few conversions happening even if market conditions are favorable. Economic and design feasibility must align with regulatory feasibility for projects to proceed.

Feasibility Heatmap: Metro Area Rankings

Not all U.S. cities are equal in their office-to-residential conversion potential. Some metro areas have the “perfect storm” of conditions: lots of outdated offices with shallow floorplates, high housing demand, and supportive policies – making conversions relatively feasible. Others have newer office stock or weaker housing economics, meaning conversions are rare. Below is a ranking of selected major metros by the share of their office inventory that is considered conversion-feasible (either Tier I or II candidates in the CommercialEdge Conversion Feasibility Index, or equivalent measures):

Table 1. Top U.S. Metro Areas for Office-to-Residential Conversion Potential (by % of office stock rated as feasible for conversion)

Rank	Metro Area	% of Office Stock Feasible (Tier I or II)
1	New York City (Manhattan)	53.1% – Over half of Manhattan’s office buildings are strong conversion candidates, the highest in the nation. This reflects NYC’s abundance of older high-rises and extremely high housing demand.
2	Portland, OR	30%+ – Around one-third of Portland’s office space is considered a good candidate for adaptive reuse. This high share is due to many smaller, older downtown buildings and the city’s proactive stance on conversions.
3	Washington, D.C.	25%+ – At least one-quarter of D.C.’s office stock (by area) is rated as convertible. The District has a large number of aging offices and has introduced tax abatements to spur downtown housing conversion.
4	Seattle, WA	~26% – About a quarter of Seattle’s office space is a viable conversion candidate. Seattle’s mix of early skyscrapers and 1970s towers, combined with high rents, contributes to its conversion potential (roughly 26% of space).
5	Boston, MA	~26% – Similarly, nearly 26% of Boston’s office inventory is deemed a good candidate for residential reuse. The city has many older commercial buildings and has launched incentive programs (state and local) to encourage conversions.
6	San Francisco, CA	25.8% – San Francisco has roughly a quarter of its office buildings fitting conversion criteria. Despite this, actual conversion activity has been slow due to high costs; the city is now cutting fees to entice developers.
7	Los Angeles, CA	24.7% – Los Angeles also has about one-quarter of its office buildings as feasible candidates. L.A. led the nation in conversion units added in 2022 and has expanded ordinances to include all buildings 15+ years old in conversion plans.
8	Chicago, IL	18.6% – Chicago has a large absolute volume of convertible space (tens of millions of sq ft), but only ~19% of its buildings by count. Many Chicago offices are post-1980 high-rises which are harder to convert, though the city is heavily incentivizing some Loop conversions.
9	Miami, FL	16.1% – Miami is notable as a Sun Belt city with a significant share (16%) of offices suitable for conversion. Its booming housing market makes conversions more enticing. Several older downtown Miami office buildings have been eyed for adaptive reuse as residential.
10	Philadelphia, PA *	(Est. ~30% by space) – Philadelphia has a strong track record of office conversions, leveraging its many pre-war buildings. Data shows ~6 million sq ft (8% of stock) in top-tier candidates and ~24.5 million sq ft overall in viable conversions, roughly one-third of local office space. City incentives and a downtown housing demand have made Philly a leading conversion market.

Sources: Loan Analytic Database

As shown in Table 1, older East Coast cities and high-cost West Coast metros dominate the top of the feasibility rankings. New York (especially Manhattan) stands out with about half of its offices potentially convertible – a reflection of its vast inventory of pre-1990 buildings and the urgent need for housing. Cities like Portland, Seattle, Boston, San Francisco, Los Angeles, and Washington D.C. all have roughly one-quarter to one-third of their office stock flagged as conversion-suitable, thanks to a mix of aging buildings and strong housing economics. Many of these cities have also enacted policies to encourage adaptive reuse (e.g. Boston’s Downtown Conversion Initiative, D.C.’s tax abatements, L.A.’s ordinance expansion, NYC’s accelerator program).

Midwestern and Sun Belt markets appear lower in the ranking. Chicago, despite its size, has under 20% of buildings ideal for conversion – likely because it has numerous modern office towers and lower rents than coastal cities. Miami at ~16% is a notable inclusion; its relatively high ranking highlights that even newer-growth cities can have some conversion candidates, particularly if there’s strong demand for downtown living.

It’s also worth noting Philadelphia and Pittsburgh as significant players. Philadelphia in particular has already seen many successful conversions (hundreds of units created from former offices near City Hall and Market Street). Data from CommercialEdge ranked Philadelphia #5 and Pittsburgh #6 in the nation by total volume of top-tier conversion opportunity, with Philly offering about 24.5 million sq. ft. and Pittsburgh 17 million sq. ft. of feasible office space for redevelopment. This translates to roughly a third of Philly’s office stock and slightly less for Pittsburgh. Their high feasibility is due to an abundance of underused early-20th-century office buildings in the downtown core, which have the right dimensions for apartments. Both cities have embraced these projects – for example, Philadelphia is converting a 1701 Market Street tower into 300 apartments, and Pittsburgh has greenlit conversions of several historic downtown buildings (with city funding support).

In contrast, some booming Sun Belt metros like Atlanta, Phoenix, Dallas are not atop the feasibility list by physical criteria, but they are still pursuing conversions for economic reasons. An Urban Institute analysis identified Atlanta and Phoenix among the cities that need conversions most – not because their buildings are ideal, but because they have a “pressing need to supply more housing” combined with high office distress. In these cases, market pressure (high population growth and housing shortages) is forcing creativity even if floorplates are not perfect. Dallas, for instance, is leading the country in office-to-apartment conversions under construction (with over 800 units underway), thanks in part to incentives like a historic building tax credit and developers finding ways to repurpose 1980s office towers. This illustrates that feasibility is a spectrum – some cities have inherently suitable building stock, while others compensate with policy and economic drive.

Conclusion

The office-to-residential conversion trend is poised to play a significant role in reshaping American downtowns in the coming years. Our feasibility heatmap shows that many legacy cities – with their adaptive reuse-friendly older buildings and strong housing demand – are fertile ground for conversions. Policy makers in these cities are already leveraging this opportunity, streamlining regulations and offering carrots to turn vacant office buildings into much-needed housing. For investors and developers, the highest rankings indicate where the low-hanging fruit lies: metros like New York, Chicago, Los Angeles, San Francisco, Washington, or Philadelphia where there are dozens of potential conversion projects that can be economically viable with the right approach.

However, even in the most promising markets, conversions face economic, regulatory, and design constraints. High construction costs, deep floor plates, or code requirements can make individual projects challenging. The fact that less than 15% of U.S. office stock is easily convertible means adaptive reuse will be a partial solution – not a panacea for either the office glut or the housing shortage. Many downtowns will still require new construction and broader economic revitalization beyond just turning offices into apartments.

For cities struggling with empty offices but lacking obvious conversion candidates, the path forward may include rethinking regulations (to expand what’s feasible) and offering subsidies to close financial gaps. In some cases, novel approaches like co-living micro-apartments can unlock buildings previously thought unusable. Public-private collaboration will be key: local governments can provide tax abatements or grants, while developers bring ingenuity in design and financing to make marginal projects work.

In conclusion, the “feasibility heatmap” is not static – it can evolve as policy and market forces change. Cities that today rank low could improve their conversion outlook by updating zoning, as San Francisco and Boston are doing, or by creating incentive programs like D.C. and Dallas. Likewise, if office valuations continue to fall (and distress grows), more buildings will tip into feasible range as acquisition costs drop. The coming years will test how far adaptive reuse can go in addressing urban challenges. For the metros at the top of our list, office-to-residential conversions represent a golden opportunity to rejuvenate downtown real estate and expand housing supply. For those further down, it may take more creativity and support – but the benefits of converting “Boardrooms to Bedrooms” are enticing enough that many cities will be motivated to turn this concept into reality.

Sources: This report cited data from real estate research firms:

(Yardi CommercialEdge/CommercialCafe conversion index),
industry groups (NAIOP),
think tanks (Urban Institute, Brookings),
and local policy announcements (NYC, DC, LA programs),
as well as news outlets covering conversion trends (e.g. Commercial Observer, Crain’s, Pew Trusts, Route Fifty).