Dean Kaplan is president of The Kaplan Group. He writes about business debt collection & contract negotiations & provides financial advice.
Extreme housing shortages in urban areas across the U.S. can be eased by redeveloping empty office towers and business parks, our agency’s new study confirms.
Reshaping vacant office space into new apartments could create around 1.25 million new homes across 91 U.S. cities, study analysts found. Over 70,000 conversions may happen in 2025 alone as architects, builders and developers take advantage of adaptive reuse incentives in cities from Boston to San Francisco.
Work-from-home trends aren’t trending down—and cities have suffered.
Our study found that more than 72% of all urban centers have seen commercial vacancies rise between 2024 and 2025, driven in large part by the post-pandemic trend toward remote and hybrid work. As of this writing, 28% of remote-capable U.S. employees work from home full time, with an additional 51% working off-site at least some of the time, according to Gallup.
Businesses that once served large cohorts of downtown workers are struggling. Restaurants, hotels, bars and retailers have been among the hardest hit, with business failures in those sectors triggering even more commercial vacancies. Researchers found that a 10% drop in foot traffic triggered nearly 3% fewer jobs in food service and hotel employment as downtown businesses shuttered.
Adaptive reuse could support economic growth in key cities and regions.
Turning empty office space into homes could benefit cities such as San Francisco, Seattle and Austin, Texas, where shortages of affordable housing have hobbled employers’ efforts to retain top talent, especially in the tech sector. Corporations and manufacturing plants in the Dallas and Houston area, for example, could gain an edge in recruiting skilled workers for space tech, car manufacturing and many other sectors.
New York City, one of the most densely populated and costly areas to live in the U.S., could see vast benefits, too. According to our study, adaptive reuse of empty offices could create more than 78,000 new homes in midtown Manhattan alone, a neighborhood where tiny studios and cramped one- and two-bedroom spaces rent for staggering prices.
While adaptive reuse—especially in urban settings—can be challenging, policymakers may opt to keep incentives in place. Concerns over urban decline have risen in light of population and employment trends that predict a dark future for cities. A study from the University of Illinois at Chicago suggests that by 2100, thousands of former population centers will resemble ghost towns.
The offices-to-homes strategy can keep cities vital while creating new jobs in design, construction, leasing and more. As urban housing stock grows, rents may stabilize, drawing thousands back to cities. A widening talent pool available to corporate interests would also support more jobs in food service, retail, hospitality and entertainment sectors in downtown areas. Growth in local tax revenues would reward cities that invest wisely and strategically in office conversion.
Converting offices into housing is one path to a healthier future.
Though office conversion is not a panacea for all the challenges American cities face, it holds genuine promise. Cities cannot thrive until we make city living affordable again.
At present, far too many urban areas are locked into cycles of decline and decay linked directly to the housing crisis. Scarcity triggers higher rents, in turn triggering waves of tenant defaults that crimp cash flow among building owners and property managers. Maintenance companies and leasing agents struggle, as well. And since neglected properties at high prices don’t rent well, the downward spiral continues.
Understanding the intersection of real estate, employment, personal finance and debt sheds light on the challenge of bringing our cities back to good health. From nearly every standpoint, transforming old offices into new homes seems like a wise investment.
The information provided here is not investment, tax or financial advice. You should consult with a licensed professional for advice concerning your specific situation.
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