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RentCafe’s Adaptive Reuse Report has revealed that adaptive projects are outpacing new apartment construction. Up 25% from pre-pandemic years, the jump includes roughly 28,000 new rentals delivered nationwide between 2020 and 2021. During the same period, new construction apartments grew 10%.

According to Yardi Matrix data, the 25% adaptive reuse growth is largely due to office-to-residential conversions as well as emerging niches like former health care and religious buildings.

“The residential market needs significantly more density in the areas of the largest cities, where the demand is greatest and where the tallest office buildings are located,” says Doug Ressler, manager of business intelligence at Yardi Matrix.

“Existing building architecture is the critical starting point. Not all buildings are equally threatened by the work-from-home revolution. Larger office buildings in abandoned central business districts are better suited to conversion than the often-smaller office complexes distributed around the suburbs.”

Hitting an all-time high, conversions from offices included 11,090 units delivered between 2020 and 2021 alone—an uptick of 43% compared with 2018 and 2019. Making up 40% of all adaptive reuse apartments, office buildings are the largest share and most popular type, according to the report.

Yet, former health care buildings are growing at a staggering faster pace with the number of apartments converted from such buildings having tripled during the pandemic compared with 2018 and 2019, a 212% increase. Religious buildings also saw an increase of 73%, and hotel conversions have experienced 65.6% growth. The next conversion niches include former factories, school buildings, and warehouses.

Washington, D.C., Philadelphia, and Chicago led the way in both office conversions and repurposed buildings during the pandemic with a combined 15% of all apartment conversions in the U.S. Washington, D.C., has opened 1,565 apartments by repurposing old buildings, almost doubling the number of conversions from the prior two years. Philadelphia has converted 1,552 in the last two years, and Chicago follows with 1,139 apartment conversions.

The top 10 cities by most converted apartments also includes: Cleveland; Pittsburgh; Richmond, Virginia; New York City; Greenville, South Carolina; Kansas City, Missouri; and Salt Lake City.

Los Angeles’ future development of adaptive reuse is growing with an expected 4,130 apartment conversions on the way. Between January and June of this year, 1,242 adaptive reuse apartments came online in Los Angeles making this year the strongest in the last decade.

Nationwide, over the next several years, 77,000 converted apartments are expected to be opened. As of July, 8,300 apartment conversions have already opened to the public this year.