Adaptive reuse projects saw a slight decline in 2022, but RentCafe reports the future is strong for apartment conversions. There were just over 10,000 apartments converted in 2022, according to the new research.
Much of the discrepancy was found in the former use of the units as office buildings saw a slowdown, while hotels jumped a record-breaking 43% in 2022. However, office conversions only had about 450 more units converted compared to hotels (3,390 vs. 2,954). In fact, hotel conversions hit 6,874 units in 2020, a then record. Despite the large decline, office buildings are still nearly 34% of the market share, roughly four percentage points higher than hotels.
Los Angeles at nearly 1,300 total apartments witnessed the largest number of conversions, twice as much as Kissimmee, Fla., at 648 units. Alexandria, Va., at three and Baltimore at four were the only other coastal cities on the top 10 list.
L.A. was also home to the most office-to-apartment conversions at nearly 700 units. Alexandria and Baltimore were second and third, respectively. Virginia’s Richmond and Norfolk were also in the top 10.
Los Angeles was also the top city for future apartment conversions at roughly 4,500 units. New York and Chicago were second and third, respectively, on the top 10 list dotted with mostly major cities like Houston and Philadelphia.
There are currently 122,000 apartments in various stages of conversion expected to hit the market in the coming years, a 63% increase from 2021.