Office building conversion: From boardrooms to bedrooms
Office building conversion: From boardrooms to bedrooms
Office building conversion: From boardrooms to bedrooms
- Author:
- March 7, 2025
Insight summary
Empty office buildings are being transformed into housing, coworking spaces, and even urban farms as cities look for new ways to use underutilized space. While these conversions create opportunities for businesses and residents, they also bring financial and regulatory challenges that may affect real estate markets and city planning. As more offices disappear, companies may adjust their operations, governments may rethink zoning laws, and communities may experience shifts in housing costs and local economies.
Office building conversion context
Office building conversions are emerging as a practical solution to address both commercial real estate vacancies and the need for alternative urban spaces. With US office vacancy rates surpassing 20 percent in early 2023 and some cities reaching 25 percent, many properties risk becoming obsolete by the decade’s end. To repurpose these empty buildings, cities are experimenting with new uses, including residential housing, coworking spaces, and even indoor farming. While converting office spaces into apartments presents logistical and financial challenges, alternative uses like vertical farms require fewer structural modifications and can help address food security concerns in urban areas.
Vertical farming is gaining attention as a viable option for repurposing underutilized office spaces, offering year-round crop production while consuming significantly less water and energy than traditional agriculture. Area 2 Farms in Arlington, Virginia, has transformed an old paper company building into a facility producing fresh greens, herbs, and root vegetables for the Washington, DC, area. Using its proprietary Silo system, which mimics plants’ natural light cycles, the farm requires minimal modifications, making it an appealing model for converting offices to farms. Similarly, AgriPlay Ventures in Calgary, Alberta, has repurposed a vacant office space into one of Canada’s largest indoor farms and plans to expand into additional floors of the Calgary Tower Center.
Beyond farming, cities are also exploring office-to-residential conversions, though structural constraints make widespread adoption difficult. An estimated 30 percent of North American office buildings could be adapted for housing, but many lack the necessary plumbing, natural light, or layouts required for livable apartments. New York, Los Angeles, and Chicago are leading efforts to transform commercial spaces into residences, aiming to address both office vacancies and the housing crisis.
Disruptive impact
As more offices turn into housing, urban areas could see a shift in real estate prices, making some neighborhoods more affordable while driving up costs in newly desirable areas. People living in converted spaces may benefit from shorter commutes and access to downtown amenities, but they may also face challenges like limited natural light or unusual layouts. Additionally, if more office spaces become farms, gyms, or community centers, residents may gain better access to fresh food and wellness services without leaving their neighborhoods.
Businesses may need to rethink where they operate and how they attract workers. Companies that rely on foot traffic, such as cafés and retail stores, may either lose customers if office conversions reduce worker density or gain new ones if buildings become apartments. Additionally, firms with large office leases may need to renegotiate contracts or risk paying for unused space. Some industries, such as property management and urban farming, may see new business opportunities as they help transform offices into livable or productive spaces.
Governments may face new regulatory and financial challenges as they support or oversee these conversions. Zoning laws and building codes may need updates to accommodate housing, vertical farms, or schools in former commercial areas. Tax revenues could shift as office property values decline while residential and mixed-use properties increase in importance. Additionally, cities may need to invest in infrastructure upgrades such as expanding public transportation and utilities to support a growing number of downtown residents.
Implications of office building conversion
Wider implications of office building conversion may include:
- Cities offering tax incentives to encourage office conversions, leading to increased private investment in urban renewal projects.
- More demand for architects and engineers with expertise in adaptive reuse, creating new job opportunities in construction and design.
- Real estate developers shifting focus from new office towers to mixed-use properties, affecting long-term investment strategies.
- Local businesses adjusting their product offerings to serve a growing number of downtown residents instead of office workers, changing retail demand.
- Governments updating zoning laws to accommodate new building uses, streamlining approval processes for adaptive reuse projects.
- Increased reliance on modular and prefabricated construction methods to speed up office-to-residential conversions, reducing waste.
- Public transportation systems adapting routes and schedules to serve residential areas where office workers once commuted.
- Rising demand for high-speed internet and digital infrastructure in converted spaces, driving investment in telecommunications.
- Cities with high office vacancies struggling to repurpose enough buildings, leading to uneven economic recovery across different regions.
Questions to consider
- How could office building conversions change how you live, work, and interact with your city?
- What types of businesses or services do you think would thrive in repurposed office spaces?
Insight references
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