America's Empty Office Buildings Are Becoming Something New
Picture a nearly 100-year-old Chicago high-rise that once hummed with hat-makers, then buzzed with magazine editors, now poised to welcome hundreds of residents to its iconic terra cotta-clad floors. That's exactly what's happening with Chicago's historic Millinery Mart Building on Wacker Place, which is slated to open this August as a 252-unit apartment building. It's a story of reinvention — and it's playing out in cities across the United States at a pace that few could have predicted just a few years ago.
Office-to-residential conversions, long discussed as a theoretical solution to twin crises in commercial real estate and urban housing, have crossed a critical threshold. They are no longer a niche experiment. They are a full-blown national trend, and the numbers back that up in a big way.
The Numbers Tell a Striking Story
According to data from RentCafe, planned office-to-residential conversion projects reached 90,300 units at the start of 2025. That represents a 28% increase compared to the year before and is nearly four times the volume recorded in 2022. That kind of growth is hard to ignore — and it signals a meaningful shift in how developers, city planners, and investors are thinking about the future of urban real estate.
Office-to-residential conversions now account for an estimated 47% of all adaptive reuse projects in the country. To put that into perspective, hotel conversions come in second at around 18%, while industrial site conversions account for roughly 16%. The office conversion wave is clearly leading the adaptive reuse movement, and its momentum shows no signs of slowing down.
Why Now? What's Driving the Office Conversion Boom
The surge in office-to-residential conversions isn't happening by accident. Several converging forces have made this moment uniquely ripe for adaptive reuse at scale.
Post-Pandemic Office Vacancies
Remote and hybrid work arrangements reshaped office demand dramatically after 2020. Many companies downsized their footprints, relocated, or abandoned long-term leases altogether. The result was a wave of financially unviable office properties sitting largely empty in prime urban locations. These buildings represent a liability for landlords and a blight for city centers — but an opportunity for visionary developers.
A Nationwide Housing Shortage
At the same time, the U.S. continues to grapple with a persistent and severe housing shortage, particularly in major metropolitan areas. Rental vacancy rates have remained stubbornly low, and home prices have kept many would-be buyers on the sidelines. Converting underused office space into apartments offers a way to add much-needed residential supply without requiring new land or greenfield construction.
Government Incentives and Zoning Reforms
Federal, state, and local governments have increasingly recognized adaptive reuse as a policy tool. Tax incentives, grants, zoning changes, and streamlined permitting processes have all made office conversions more financially attractive and logistically feasible for developers who might otherwise balk at the complexity involved.
Not All Office Space Is Convertible — But a Lot Is
It's important to temper enthusiasm with realistic expectations. Converting office buildings to residential use isn't a one-size-fits-all solution. Many modern office towers — especially those built after the 1980s with deep floor plates designed for open-plan layouts — present significant structural and logistical challenges. Adding windows, plumbing, and natural light to interior spaces can be prohibitively expensive.
That said, the scale of opportunity is still remarkable. Experts estimate that more than 1.9 billion square feet of existing office space — roughly 24% of total U.S. office inventory — is considered suitable for residential conversion. Older buildings with smaller floor plates, more windows, and higher ceilings tend to be the best candidates. Many of these are precisely the kind of architecturally distinctive properties, like Chicago's Millinery Mart, that make for compelling and desirable places to live.
Which Cities Are Leading the Way?
While the office-to-residential conversion trend is playing out across the country, a handful of major metropolitan areas are clearly out in front.
- New York City leads the nation with a pipeline of projects expected to create 16,358 apartments through conversions. The most ambitious single project is the building at 111 Wall St., where plans call for more than 1,500 apartments — a transformation of one of the Financial District's most recognizable addresses.
- Washington, D.C. ranks second with plans for 8,479 apartments through office conversions, reflecting both the city's elevated office vacancy rates and strong local demand for housing.
- Chicago comes in third with a pipeline of 4,360 apartments, including the Millinery Mart Building and several other adaptive reuse projects in the downtown core.
These three cities share common traits: dense urban cores, historic building stock well-suited to conversion, active local policy support, and persistent housing demand that makes residential development financially attractive even when conversion costs are high.
What This Means for the Future of Urban Real Estate
The office-to-residential conversion trend represents more than a practical fix for vacant buildings. It signals a broader rethinking of what urban downtowns are for. Cities built around the nine-to-five commuter are evolving into more mixed-use, around-the-clock neighborhoods where people live, work, eat, and socialize within walkable distances.
For renters, this trend means more housing options in desirable city-center locations, often in buildings with significant architectural character and history. For developers, it offers an alternative to ground-up construction in markets where land is scarce and costs are high. For cities, it's a tool for revitalizing struggling commercial corridors and putting neglected properties back on the tax rolls.
With nearly 90,300 units in the pipeline and conversion activity accelerating year over year, office-to-residential development is no longer a fringe strategy. It has become one of the defining real estate trends of this decade — and the Millinery Mart Building, rising again with a new identity over the Chicago River, is as good a symbol of that transformation as any.