Adaptive reuse continues to increase in the rental housing industry. Former offices, hotels, schools, malls, hospitals and other nonresidential buildings are being converted into apartments at a record pace, according to RentCafe. There were more than 12,700 new apartments in 2023, which is up 17.6% from the previous year and on par with 2021 but just behind 2019 and 2020.
There are 151,000 apartments in different stages of conversion in the U.S., and 58,000 are former offices. However, in 2023, former hotels were 36% of the units converted, followed by offices at 28% and factories at 15%. This is the first time since 2012 that hotels out-converted offices.
Manhattan led the way in 2023 with 733 converted apartments—all former hotels—giving the New York City borough nearly 6% of all converted apartments in the country. Not far behind was Richmond, Va., with 662 apartments. Alameda, Calif.; Charlotte, N.C.; Cincinnati; Lawrence, Mass.; Albuquerque; and Denver were the other cities with at least 300 converted apartments in 2023.
Los Angeles is the city with the most future apartment conversions with more than 5,800 on tap. Manhattan is second with more than 4,300, followed closely by Chicago and Philadelphia each with more than 4,100 units.