It’s a growing trend as the office market continues to struggle across the country: developers are turning outdated office space into apartment units. But how strong is this trend in Chicago? Very, according to new research from RentCafe.
In its latest adaptive reuse report released at the end of January, RentCafe said that Chicago ranks fourth in the country in the number of office-to-apartment conversions now underway. The Chicago market trails only Washington, D.C., New York City and Dallas in the number of conversions.
According to RentCafe, Chicago is set to bring 2,822 new apartment units to the market by converting old office spaces into multifamily. Office-to-apartment projects account for 55% of all conversions underway in the Chicago market. Conversions from office to retail stores make up 10.3% of Chicago-area conversion projects, while community centers account for 9.36%.
Many of the office-to-apartment conversion projects in Chicago are significant ones, too. A conversion from office to multifamily at 135 S. LaSalle St. will bring 430 new apartment units to the city. That ranks as the largest office-to-apartment conversion underway.
Other major office-to-apartment conversions include Bell Works Chicagoland, which will bring 375 new multifamily units to the Chicago market, and 30 N. LaSalle St., which will add 349 units.
This isn’t surprising to anyone who’s been following the multifamily and office sectors.
Demand for multifamily housing is on the rise and has been for years. There simply aren’t enough apartment units available to meet the number of renters searching for multifamily space.
At the same time, the demand for office space among companies has dipped thanks largely to the large number of employees who are still working at least part of the time from home. Add to that the demand that many companies now have for higher-quality office space, and the country is left with many older office buildings that are no longer in demand in today’s market.
Converting these spaces into apartment units makes sense. The challenge, of course, is that conversions can be expensive, sometimes too expensive for them to make financial sense. And many office buildings don’t work for conversions because of their location and structural issues.
Chicago isn’t alone in seeing a rise in office-to-apartment conversions. In Washington, D.C., conversions now underway are expected to 5,820 new apartment units, while that number stands at 5,215 in New York City and 3,163 in Dallas.
In Cleveland, conversions underway are expected to bring 2,012 new apartment units, while in Kansas City, Missouri, they are expected to add 1,510 new multifamily residences to the market. That number stands at 1,334 in Minneapolis, 1,070 in Detroit, 1,006 in Columbus and 911 in Milwaukee.
RentCafe reported that from 2021 to 2024, the number of apartments scheduled for conversion from old office spaces increased from 12,100 to 55,300 nationwide.
https://www.creconsult.net/market-trends/office-to-apartment-conversions-chicago/
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