The Most Expensive Fix in American Housing

Office-to-residential conversions are running at record pace, with 70,700 new apartment units in the pipeline for 2025 alone, part of a broader shift in how North American cities are using their commercial cores.

Since COVID, the American downtown scene spent too long looking like a film set between shoots. The furniture still there, the lights still humming on timers, the coffee cups gone… sitting in the back of the cabinet in the kitchen.

Remote work emptied the offices. It left cities holding buildings they had no obvious use for, in neighborhoods that had organized themselves entirely around the assumption that millions of people would show up every weekday morning and spend money.

That assumption is now being renegotiated.

The numbers compound quickly when you look back: in 2022, the conversion pipeline totaled 23,100 units. By 2023 it had nearly doubled to 45,200. By 2024 it reached 55,300, and now it has climbed to an all-time high.

New York is driving the charge: Conversion starts in the city totaled 1.6 million square feet in 2023, more than doubled to 3.3 million in 2024, and already by August 2025 had surpassed 4.1 million square feet, the entire previous year’s total in eight months.

Manhattan’s largest conversion project tells you something about the scale these developers are thinking at. At 25 Water Street in the financial district, developers are transforming a 1.1-million-square-foot office tower into 1,300 apartment units a building the size of a small town, repurposed floor by floor.

In New York, policy has followed ambition: the city’s Office Conversion Accelerator Program, a new tax incentive passed in 2024, zoning reforms under the City of Yes framework, and the 2025 lifting of a density cap have collectively expanded what’s eligible and reduced what’s bureaucratically impossible.

Calgary moved on this earlier and more aggressively than most. Its Downtown Development Incentive Program offers $75 per square foot of converted space, up to $15 million per property, as an upfront subsidy and demand overwhelmed the original funding so quickly that the program had to be temporarily paused before reopening with additional federal backing.

Chicago’s LaSalle Street Reimagined program takes a different angle, using tax increment financing and requiring that at least 30 percent of converted units serve residents earning around 60 percent of area median income. The subsidy comes with strings, and the strings point toward affordability.

The physical reality of these projects resists the enthusiasm that surrounds them.

Deep floor plates, the legacy of mid-century office design, which used fluorescent lighting and air conditioning to push rentable space far from any exterior wall make natural light difficult to deliver to interior rooms.

Immovable load-bearing walls dictate where apartments can and cannot go. Ventilation systems built for open-plan offices have to be rebuilt from scratch for residential use.

The buildings that convert most cleanly are older, smaller-footprint structures built before those design conventions took hold. The glass towers from the 1970s and 1980s, the ones that define the skylines of most American downtowns, are often the hardest to work with and the most likely to sit vacant.

Cost is the number that sobers the conversation fastest. Converting an office building into housing runs an average of $685 per square foot… more than buying a finished multifamily property at $600 per square foot, and more than building a new one from the ground up at $588.

Office conversion, in other words, is frequently the most expensive way to add housing to a city, not the cheapest. Conversions still represent only 1.7 percent of total U.S. office inventory and the gap between buildings that are structurally viable and buildings that are merely vacant is wide enough to swallow most of the optimism.

The pandemic didn’t immediately trigger a rush of conversions. Completions actually fell in 2020 and 2021 as construction froze and developers waited. What the pandemic triggered was planning.

That planning is now coming due, in building permits, in demolition crews, in architects solving the light-well problem one floor plate at a time.

The housing shortage that emptied waiting lists and drove rents past reason didn’t emerge from a single failure, and it won’t be solved by a single mechanism. But the office tower that once sorted workers by floor and title has begun, slowly and expensively, to become the kind of place where people actually live.

That’s worth something. The question is whether cities will decide it’s worth enough.

Become a monthly contributor to this publication by upgrading (at the bottom of this page) or leave a one-time tip below. The more space and time I have to write the further we can go to make lasting changes across social media and the world:

Buy Me A Coffee

Your Neighbor,

Benji Faun

1. RentCafe / Planetizen — *Over 71K Office-to-Apartment Units in the Pipeline for 2025* (Feb. 2025)

2. Cushman & Wakefield — *Office to Residential Conversions Surge to Record Levels in New York City* (Sept. 2025)

3. The Mortgage Point — *2025 Office-to-Apartment Conversions Break Record After Record* (Feb. 2025)

4. Econsult Solutions — *Office-to-Residential Conversions: A Comparative Analysis of Incentive Programs in Four North American Cities* (July 2025)

5. Callan — *2025 Office Conversions: Issues for Institutional Investors* (June 2025)

6. Ballard Spahr — *Office to Residential Conversion: A Tale of the City and the Suburbs* (2025)

7. Strong Towns — *Why Cities Need More Than Office Conversions to Fix Their Housing Shortage* (March 2025)

8. CBRE — *Conversions and Demolitions Reducing U.S. Office Supply* (June 2025)

9. Propmodo — *The Great Office Conversion Is Just Getting Started* (April 2026)