Why Converting Office Buildings into Residences Is So Difficult—and What Some Cities Are Doing Right

Cities across the U.S. are dealing with a surplus of underutilized office buildings, especially in urban centers. The shift toward remote work, triggered by the COVID-19 pandemic, left many office spaces vacant. These empty buildings seem like prime candidates for conversion into much-needed housing, but the process is more complicated than it looks.

Here’s why converting office buildings into residences is challenging, examples of cities that are making progress, and how you can advocate for similar changes in your community.

The Challenge of Office-to-Residential Conversions

1. Building Design and Layout: Office buildings were not built with housing in mind. Most have deep floor plates, meaning they are too wide to allow natural light to reach the center of the building. Apartments, by contrast, need windows in most rooms for light and ventilation. This structural issue often makes it difficult to divide office buildings into suitable residential units without expensive redesigns.
2. Zoning Restrictions: Zoning laws in many cities dictate what types of buildings can exist in different areas. In downtown business districts, zoning codes may prevent residential use. Cities that want to encourage office-to-residential conversions need to amend their zoning rules, which can be a slow process involving public input and political will.
3. Cost of Retrofitting: Office buildings require significant investment to be turned into livable homes. Retrofitting for plumbing, kitchens, bathrooms, and safety standards is expensive. The cost can be prohibitive, especially for older office buildings that require major updates to meet modern building codes. Developers may find it cheaper to build new housing elsewhere rather than converting existing office spaces.
4. Financial Viability: Office rents are often higher than residential rents, especially in prime downtown locations. This difference can deter building owners from pursuing conversions, as they could lose revenue by switching from office tenants to residential tenants. Moreover, financing these conversions can be tricky, as many lenders view office-to-residential projects as high-risk investments.
5. Regulatory Hurdles: Cities impose regulations for residential buildings—such as parking requirements, green space provisions, and accessibility standards—that don’t apply to office buildings. Complying with these rules often requires structural changes or space set-asides that make conversions less feasible. Developers must navigate this web of regulations to create homes that meet legal requirements while remaining profitable.

Success Stories: How Some Cities Are Getting It Right

Despite these challenges, several cities have managed to turn empty office buildings into vibrant residential spaces. Here’s how they did it.

1. Washington, D.C.: Washington, D.C. has actively supported office-to-residential conversions. The city streamlined its zoning regulations in crucial downtown areas to encourage residential development. It also offers financial incentives like tax breaks and subsidies to developers willing to take on the risk. As a result, several former office buildings have been successfully converted into housing, helping to increase the downtown residential population.
2. New York City: The “421-g” tax incentive program was pivotal in transforming Lower Manhattan’s office spaces into apartments in New York. The program offered property tax exemptions for developers who converted outdated office buildings into residential units. These incentives created thousands of apartments, breathing new life into neighborhoods that once emptied out after business hours.
3. Los Angeles: Los Angeles tackled the issue with its Adaptive Reuse Ordinance, which simplifies the process of converting older, vacant office buildings into housing. The ordinance relaxes zoning and building code requirements, making it easier and cheaper for developers to create new apartments. Since its adoption, thousands of residential units have been built in downtown L.A., attracting new residents and sparking revitalization.
4. Cleveland: Cleveland’s downtown has seen a resurgence thanks to tax credits and grants designed to encourage office-to-residential conversions. The city offers financial incentives to developers willing to convert underutilized office buildings into mixed-use spaces that combine housing, retail, and entertainment. This approach has helped transform Cleveland’s downtown into a lively, 24-hour district where people live, work, and play.
5. Denver: Denver has promoted office-to-residential conversions through its Downtown Area Plan. The city provides financial incentives, reduces parking requirements, and streamlines the permitting process for developers looking to convert office spaces into housing. This coordinated effort has resulted in several successful conversions, adding hundreds of new housing units to the city’s urban core.

What You Can Do to Advocate for More Conversions

1. Engage with Local Officials: Local zoning laws and building codes can either promote or stifle office-to-residential conversions. Reach out to your city council or zoning board to express your support for changes that make converting underutilized office buildings into housing easier. Push for policies like relaxed zoning, tax incentives, or reduced parking requirements for these projects.
2. Support Adaptive Reuse Policies: Look for opportunities to support adaptive reuse ordinances in your city. These policies encourage the conversion of existing buildings rather than tearing them down. This approach saves resources, reduces waste, and preserves the architectural character of urban centers. Advocate for adopting adaptive reuse policies where they don’t already exist.
3. Educate Your Community: Often, residents are unaware of the challenges or benefits of office-to-residential conversions. Share information with your neighbors, community groups, or housing advocates about why these projects are important. Organize local meetings or online forums to discuss how to push for more conversions in your city.
4. Encourage Mixed-Use Development: One way to make office-to-residential conversions more viable is by supporting mixed-use development, where residential, commercial, and retail spaces coexist in the same building. Mixed-use buildings can generate revenue from both residents and businesses, making conversions more financially attractive to developers. Advocate for zoning changes that allow mixed-use development in your area.
5. Ask for Public Incentives: Public funding can make these conversions more attractive to developers. Ask your city to create tax incentives, grants, or low-interest loans for developers willing to take on office-to-residential projects. Public-private partnerships can help share the financial risk and make conversions more feasible.

Can These Conversions Help Solve the Housing Crisis?

Converting office buildings into residential spaces won’t solve all housing problems, but it can help address the shortage of “missing middle” housing—homes that are affordable to middle-income residents. Cities that successfully convert office buildings into apartments create more housing options for working-class families and individuals priced out of high-end developments but don’t qualify for affordable housing programs.

By advocating for these conversions, you’re helping to diversify the housing market and make downtown areas more vibrant and accessible to all residents.