How vacant office buildings could be used to alleviate housing shortages

(InvestigateTV) — Once bustling downtown office buildings now sit empty following the pandemic-induced shift to remote work.

In 2024, the nation’s office vacancy rate hit a record 20%. That has cities searching for ways to bring new life into those shuttered spaces.

Taking the First Steps

Gary Cohen is a developer in Washington D.C. whose grandfather built a former U.S. Department of Labor office building in the 1960s. The same building then served as the headquarters for the Peace Corps for several decades.

In 2019, it became vacant.

“We weren’t having a lot of luck in finding tenants,” Cohen said.

In 2022, Cohen’s family-owned company started transitioning the vacant office building into residential apartments.

“You know, I love cities. I believe in cities. I believe people want to be in cities. So we looked into it and we spoke with our builder, we spoke with architects, we did a whole study and everything checked the box.”

According to a recent report from RentCafe, office-to-apartment conversions have more than quadrupled nationwide.

In 2021, nearly 12,000 apartments were converted. In 2024, that number skyrocketed to over 55,000.

Recreating Downtown Areas

Stijn Van Nieuwerburgh is a Professor of Real Estate at Columbia University. As the prevalence of remote work has left more offices empty, Nieuwerburgh believes these office transitions could help cities with several major issues.

“I think at the end of the day we have too much office and we also have too little housing -- and so I think if we could convert just a part of these offices to residential units that would actually greatly help both.”

However, his research revealed that just a fraction of U.S. office buildings could realistically be repurposed due to the building’s structure.

What Makes a Building Repurpose Ready?

Gary Cohen walked InvestigateTV+ through the now-residential building.

He explained that the building’s corner location, high ceilings and windows on all four sides helped make it a viable project producing 163 apartment units.

“We ripped everything off - all the mechanical, all the electrical, all the plumbing. You know, there’s a lot of unknowns. There’s not like a roadmap on, hey, oh, you got an office building here. Here’s how you do it. Every single building is different. This building just happened to work.”

Interest continues to grow in what is being labeled the first post-pandemic office-to-residential project to open in downtown D.C.

Pivoting to the Future

Nina Albert, D.C.‘s Deputy Mayor for Planning and Economic Development, says they’re offering a 20-year tax abatement for developers who agree to include specific percentages of affordable housing in conversion projects.

“The city is not dead, right? No city is dead. In fact, we just need to pivot. We’ve focused primarily on a financial incentive, it’s in the form of a tax abatement.”

Cohen believes government subsidies are an absolute must for these projects.

“I think it’s incumbent upon them to help give incentives to developers, to kickstart these things. But – with that said – I think you’ll ask a lot of developers and they may say that’s still not enough."

Meeting Demand for Rental Housing

In order to meet the current demand for rental housing, the National Multifamily Housing Council estimates that by 2035, the U.S. needs to build 4.3 million more apartments.

More than 40% of this future demand is accounted for in the states of Texas, Florida and California.

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