What the Return to Office Means for Multifamily Real Estate Investors

As cities and workers adapt to a new normal, the return to the office (RTO) is reshaping the urban landscape. The shift from remote work to in-office presence is not just a trend; it’s a catalyst for growth, particularly for multifamily real estate. In this blog, we’ll explore how the resurgence of office workers is impacting demand for urban housing, driving property values, and creating new opportunities for multifamily investors.

The Resurgence of Urban Demand

After years of remote work, cities are seeing a marked resurgence in office attendance. According to McKinsey, the share of workers primarily in the office surged from 34% in 2023 to 68% in 2024—a dramatic 34 percentage-point jump. This shift is creating renewed demand for housing in urban centers as workers return to city hubs.

As businesses continue to bring employees back to offices, prime urban locations are becoming more desirable. In particular, cities like New York, Washington, D.C., and Chicago are experiencing a revitalization, with significant migration patterns emerging as workers seek proximity to work, amenities, and a vibrant urban lifestyle.

For multifamily investors, this resurgence offers an opportunity to cater to an increasing pool of renters who are seeking convenient, city-centered living spaces close to where they work. This trend is also seen in other major urban markets across the U.S., where the return to office is driving demand for residential spaces in walkable, well-connected neighborhoods.

Live-Work-Play: The Resurgence of Urban Neighborhoods

One of the most impactful trends emerging from the return to office policies is the “Live-Work-Play” model. Neighborhoods near office clusters are seeing a surge in foot traffic, which is boosting local retail and lifestyle businesses.

As employees return to their offices, they’re seeking more than just a place to work. They want access to dining, entertainment, and community spaces that make their urban living experience vibrant and convenient. This trend benefits multifamily developments that combine residential spaces with retail and recreational options, creating mixed-use neighborhoods that encourage a higher quality of life for residents.

This is particularly relevant for multifamily developers who are looking to create spaces that integrate residential living with urban amenities. Mixed-use developments are becoming increasingly sought-after, offering tenants an enhanced urban experience that encourages a balanced lifestyle—close to work and leisure alike.

Rising Property Values as Office Areas Regain Their Strength

As office markets stabilize and more companies require employees to be physically present, the value of properties near major office hubs is climbing. According to a recent Reuters article, areas that rely heavily on office tenants are starting to regain pricing power, benefiting both commercial and residential real estate.

For multifamily investors, this is a critical development. As office buildings fill back up, surrounding residential areas are seeing an increase in property values. This gives investors a chance to capitalize on rising rents and higher occupancy rates, especially in neighborhoods that cater to a workforce that needs to live within close proximity to their offices.

Office-to-residential conversions are also playing a key role in this transformation, as older office buildings that have become underutilized are repurposed into much-needed housing units. This adaptive reuse not only helps meet housing demand but also plays a role in revitalizing urban areas that had been struggling in the post-pandemic economy.

What This Means for Multifamily Investors

The return to office presents several opportunities for multifamily investors:

1. Increased Demand for Urban Housing – As workers flock back to city centers, demand for housing near office clusters is rising. Investors should consider properties near transit lines and urban business districts, where demand for rentals is likely to be highest.
2. Higher Rent Growth and Occupancy – More people working in city centers means higher demand for rental housing, leading to rent growth and improved occupancy rates for multifamily properties. Investors can expect stronger rental yields in areas that see higher foot traffic and greater demand for housing.
3. The Importance of Mixed-Use Developments – As workers return to the office, they are also looking for neighborhoods that offer more than just housing. Mixed-use developments—those that integrate retail, dining, and recreational spaces—are becoming key to attracting tenants who want convenience and a dynamic urban experience.
4. Capitalizing on Office Conversions – The adaptive reuse of office spaces into residential properties offers multifamily investors an opportunity to expand their portfolios in growing urban areas. These conversions are a cost-effective solution to the housing shortage and align with sustainability goals by reducing the need for new construction.

Multifamily Real Estate in a Post-Pandemic World

As the return to office continues to evolve, with many businesses and government entities, including state mandates such as Governor DeWine’s recent order for state workers to return to the office full-time, multifamily real estate investors must remain agile, staying attuned to shifts in commuter behavior and urban migration trends. Cities are adjusting to a new normal, and those that embrace mixed-use development, urban renewal, and office-to-residential conversions will be at the forefront of this transformation.

The next few years could bring even more growth to urban areas, as both workers and residents seek the benefits of living close to work, culture, and community amenities. By investing in key urban markets and focusing on sustainable, community-driven developments, multifamily investors can position themselves to take advantage of the opportunities that lie ahead.

The return to office is reshaping the multifamily real estate landscape. As businesses bring employees back to the office, urban demand is rebounding, and the value of properties near office clusters is rising. For multifamily investors, this is a key moment to capitalize on rising demand for housing in prime urban markets, and to focus on mixed-use, sustainable development that meets the evolving needs of today’s renters.

By staying ahead of these trends and understanding how they intersect with urban revitalization, investors can unlock new opportunities in the growing multifamily sector. As cities adapt to the return to office, the future of multifamily real estate is poised for growth and innovation.

Sources:

• Reuters: Office Markets Recover
• McKinsey: Return to Office Data