New Study Offers Data-Driven Approach for Office-to-Housing Conversions

Gensler, Brookings Metro, and HR&A Advisors Unveil Findings on How Cities Can Transform Underused Offices into Housing

SAN FRANCISCO — As American cities grapple with persistently high office vacancies and an escalating housing crisis, a new report provides critical insights into the potential for converting office buildings into residential spaces. “Understanding Office-to-Residential Conversion: Lessons from Six U.S. Case Studies” examines conversion activity in Houston, Los Angeles, Pittsburgh, St. Louis, Stamford, and Winston-Salem, offering a roadmap for policymakers and developers navigating this complex process.

This research — produced by Brookings Metro, Gensler, HRA Advisors, and Eckholm Studios, with support from the U.S. Department of Housing and Urban Development (HUD) — provides a data-driven framework to help cities optimize office-to-residential (O2R) policy and practice.

“Office to residential conversions feel like a way to solve two problems with one solution — but what we learned from these case studies is that across cities there are differing motivations, goals, and thus policy levers that it makes sense to pull on,” said Tracy Hadden-Loh, Fellow at The Brookings Institution.

The report finds that office-to-residential conversions present a strategic opportunity to tackle three pressing urban issues:

• Unmet housing demand: Cities like Los Angeles face a critical shortage of housing, particularly for lower-income households.
• Office market distress: Many downtowns, such as Pittsburgh’s, are struggling to repurpose aging office stock as tenant needs evolve, putting pressure on local tax revenues.
• Downtown vibrancy: Many cities are seeing weekly visits at less than 50% of pre-pandemic levels, resulting in small businesses struggling and downtowns feeling empty.

While some cities have seen organic conversion activity in high-demand housing markets, the report emphasizes that in many cases, local policy and financial incentives are essential to making projects viable.

“Too often, conversations about office-to-residential conversions overlook the real data needed to drive informed, effective decisions” said Steven Paynter, Principal at Gensler. “This study is different. We conducted in-depth research on both the physical realities of downtown buildings and the financial feasibility of conversions. Our approach is grounded in facts — real data, real buildings, and real economic conditions — so that cities can craft policies that actually work in the real world.”

“Our research on downtown areas across the country shows that the most successful urban cores serve multiple purposes and attract diverse groups of people throughout the day and week,” said Jon Meyers, Partner, HR&A Advisors. “Converting empty office space for new uses presents a strong opportunity to help downtowns thrive as economic engines for their cities and regions. Our study highlights various strategies that are already working in different cities, and we invite local leaders to use these insights to help identify their priorities, recognize opportunities in their communities, and implement the right tools to achieve their goals.”

Through a combination of market analysis, stakeholder interviews, and architectural feasibility assessments, the study identifies four key levers that cities can use to facilitate office-to-residential conversions:

• Regulatory flexibility: Zoning and building code reforms, such as allowing conversions by-right, help to accelerate projects.
• Financial incentives: Tools like tax abatements, historic preservation credits, and low-cost financing help bridge the feasibility gap.
• Demand-driven strategies: Investments in public space, transit, and amenities can boost residential appeal in former office corridors.
• Targeted subsidies: Inclusionary zoning or direct subsidies can ensure conversions also advance affordability and equity goals.

While office-to-residential conversions have largely been driven by local and state governments, the report highlights a growing role for federal support. Historic tax credits have played a significant role in past conversions, and HUD’s continued engagement could help scale efforts nationwide.

The study underscores that there is no one-size-fits-all solution — effective strategies must be tailored to each city’s fiscal structure, real estate market, and regulatory environment. However, this study’s broad research has created foundational policies that will form the basis for all U.S. cities seeking to create more vibrancy and reinvigorate housing supply.

About the Study
This report is based on qualitative and quantitative research conducted between June and October 2024. The research team conducted interviews with public- and private-sector leaders, analyzed commercial real estate trends using CoStar data, and evaluated the architectural feasibility of conversions using Gensler’s O2R conversion algorithm. This research was supported by the U.S. Department of Housing and Urban Development (HUD) under a cooperative agreement.