The concept of up-cycling in real estate has existed for generations – think about all of the chic loft spaces in cities like New York that previously existed as meat-packing plants or garment distributors.
This year has marked a record year for apartment conversions across the United States, according to a new survey by RENTCafé. More than 20,100 spaces will be completed by the end of this year, which is nearly double the amount for the previous two years combined. Thirty-two thousand new apartments have been created out of spaces previously used for other purposes. And 41 per cent of those are in former office buildings.
More people continue to work from home, so the demand for office space has dropped. The environmental impact of construction is reduced, because buildings are not required to be constructed from scratch. There’s also money to be saved – scarcity of materials have caused prices to skyrocket.
“One estimate could be that renovations could cost about 30 to 40 per cent less than new construction for the same number of units,” said Emil E. Malizia of the University of North Carolina. “Total development cost per unit should be less as long as the cost of the site and building is not significantly more expensive than the cost of site acquisition for new construction.”
The hunger for space is a constant issue for many downtown cores, and with potential renters seeking out something outside of the norm, the report suggests spaces such as these have become a draw.
The report states that Philadelphia and Washington, D.C. have been at the forefront of producing the most conversions in the last couple of years. Philadelphia has redeveloped more than 1,860 new apartments since 2020, including office spaces, schools, and a former hospital dating back to the 1840’s. Meanwhile, Washington has created nearly 1,800 spaces of its own in the same time frame.