Understanding Office-To-Residential Conversion. Lessons From Six US Case Studies

Report by Brookings (2025) | Conversions, Regeneration, Urban Planning

Curators: Ana-Mihaela Faciu and Alexandra Faciu

Westmount, Canada

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Why we recommend it: Office-to-residential conversions deliver a range of significant benefits that directly address the economic, social and environmental challenges currently facing U.S. cities. In the face of a historic shortage, they are taking steps to increase housing supply, particularly in high-demand markets where affordability gaps are widening. Furthermore, they have been instrumental in breathing new life into struggling downtowns by transforming obsolete office districts into mixed-use neighbourhoods. These new neighbourhoods are defined by round-the-clock activity, diversified tax bases and stronger local economies.

These conversions are a more sustainable option than demolition and new construction, as they preserve embodied carbon and historic structures. The advancement of fair housing goals is achieved through the strategic placement of low- and moderate-income residents in closer proximity to employment centers, thereby reducing commuting times and enhancing access to opportunities. When paired with streamlined approvals and targeted incentives, they become financially viable tools for stabilizing cities, attracting private investment, and preventing long-term decline.

When viewed in its entirety, this set of benefits positions conversions as one of the most effective strategies for creating resilient, inclusive, and economically vibrant urban cores.

Key takeaways:

- The rapid shift away from the traditional five-day office working week, accelerated by the pandemic, has created a structural challenge for U.S. cities whose fiscal models depend heavily on office activity. Concurrently, the country is grappling with its most severe postwar housing shortage, while office vacancies continue to rise, particularly in older, less adaptable buildings. This convergence has elevated the office-to-residential conversion as a critical strategy to expand housing supply, stabilize downtown economies, diversify tax bases, preserve historic assets, and advance fair housing by placing homes closer to job centers. However, despite its potential, progress remains slow due to market uncertainty, restrictive zoning, unclear vacancy data, and ongoing differences between conversion costs and achievable rents or sale prices.

- This research, supported by case studies funded by the U.S. Department of Housing and Urban Development (HUD) in Houston, Los Angeles, Pittsburgh, St. Louis, Stamford, and Winston Salem, integrates interviews with public and private stakeholders, proprietary market data, and Gensler’s feasibility algorithm applied to over 150 buildings. The analysis highlights the core drivers of conversion activity, the barriers that impede it, and the policy levers that can unlock greater momentum.

- Conversions respond to three urgent needs: rising demand for housing, especially affordable units in high cost markets; the fiscal strain created by obsolete office districts that no longer generate sufficient economic activity; and the imperative to further fair housing by enabling lower income workers, often from protected groups, to live near downtown job clusters. Market demand is the strongest indicator of feasibility. In high-demand submarkets, conversions proceed even with limited incentives, as evidenced in Stamford, where regional housing pressures prevail over policy constraints. Conversely, Houston’s downtown market demonstrates a preference for office to hotel conversions, attributable to the complexity of meeting parking requirements, which hinders the reuse of residential properties. In areas where demand is lower, such as parts of Pittsburgh, even generous incentives cannot overcome fundamental challenges to livability.

- Policy interventions can be categorized into two main areas: process reforms and financial supports. Streamlined permitting, zoning rights and flexible building codes reduce timelines and uncertainty, which is consistently cited as developers’ top concerns. Financial tools include federal and state historic tax credits, which have leveraged hundreds of billions in private investment, as well as local abatements, grants, and low interest loans tied to affordability or workforce requirements. The introduction of additional demand-side tools, such as HUD vouchers or relocation incentives, can strengthen the market case for conversions. At the same time, investments in transit, parks and public amenities can enhance neighbourhood appeal.

- The primary challenge related to feasibility is the production value gap: when the cost of production exceeds the market’s capacity to support it, projects often face difficulties. In high-demand cities, the gap is narrowed through natural appreciation, while in weaker markets, carefully calibrated subsidies are required to avoid overpayment in strong areas or inefficiency in weak ones. Equity considerations add a layer of complexity; while conversions can incorporate inclusionary units, targeted subsidies for retail or public realm improvements may more effectively stimulate neighbourhood demand.

- Federal involvement continues to be anchored in historic tax credits and LIHTC (Low-Income Housing Tax Credit), with limited uptake of newer programs aimed at transit or emissions goals. Experts recommend expanding project-based vouchers, restructuring energy-related tax incentives, and simplifying federal loan programs.

- Case studies illustrate diverse pathways: The LaSalle Reimagined project in Chicago has delivered large-scale mixed-income housing. Philadelphia has leveraged historic credits to convert dozens of buildings. California has accelerated suburban conversions. Atlanta has acquired buildings for affordability. And Lower Manhattan’s 1990s conversions demonstrate long-term fiscal gains.

- The key takeaway from this analysis is that cities must adapt their economic models to a post-pandemic reality. Office-to-residential conversions are not a universal solution. Some buildings are better suited for hotels or life sciences. However, when paired with equity-focused policies, they can anchor resilient, inclusive downtowns and unlock significant housing potential within existing infrastructure.

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