In 2023, there was a notable increase in adaptive reuse projects, particularly in the conversion of outdated buildings into apartments, marking a 17.6% rise compared to 2022. According to RentCafe’s latest report, approximately 12.7K new apartments entered the market through adaptive reuse, a return to levels seen in 2019–2020 but still below the peak in 2016–2017. Currently, there are 151K apartments in various stages of conversion nationwide, with 58K units transformed from former office spaces.

The trend of adaptive reuse projects saw hotel conversions taking the lead, surpassing office conversions. Nationally, over 4.5K apartments were converted from repurposed hotels, accounting for more than a third of all conversions. This trend was particularly strong in destination cities like NYC, where many underutilized hotels have been repurposed into apartments due to the city’s ongoing housing shortage.

In terms of regional leadership, Manhattan led all metros in adaptive reuse projects, creating 733 apartments from repurposed hotels. Richmond, VA, followed closely with 662 apartments entering the market through adaptive reuse, while Alameda, CA, repurposed 372 new apartments from a former warehouse property. Ohio also had multiple cities in the top 10 list for apartment conversions, with Cincinnati and Cleveland ranking high.

The key takeaway is that adaptive reuse provides a sustainable housing solution, minimizing environmental impacts associated with new construction. Additionally, it offers a cost-effective method to quickly create new housing in dense urban areas. Despite the initial costs and permitting challenges, the conversion of neglected buildings into vibrant residential spaces is expected to continue.