Which Residential Conversions Make Sense?

June 23, 2025

In a housing market hungry for solutions, adaptive reuse might not be the magic answer—but it’s undoubtedly a powerful one.

As cities across the U.S. continue to grapple with both severe housing shortages and a glut of underused commercial space, developers and policymakers alike are increasingly turning to residential conversions. The transformation of obsolete structures into much-needed housing is no longer a niche strategy, but a vital tool in the urban development playbook.

Today, developers look at adaptive reuse as a practical response to today’s shifting urban fabric. Office occupancy remains well below prepandemic levels in most major markets, while demand for housing—particularly affordable housing—continues to climb. Older office buildings from the mid-20th century, extended-stay hotels, defunct schools and warehouses are now increasingly viewed as valuable real estate assets, not relics.

“The most suitable properties for residential conversions are older office buildings, hotels and sometimes industrial buildings, particularly those with open floorplates, high ceilings and ample windows,” Avenue Realty Capital Co-Founder Udi Kore told Multi-Housing News. These features allow for greater flexibility in reconfiguring layouts to meet residential needs.

The appeal of adaptive reuse lies in its ability to accelerate timelines, reduce environmental impact and, in some cases, even lower costs. Converting an underused site into housing typically requires less permitting and less new infrastructure than building from scratch, while also tapping into the unique character of older architecture.

Developed by Property Resources Corp. and Avenue Realty Capital, The Hartby is a residential conversion of the historic St. John’s College building into 142 market-rate apartments. Image courtesy of Woods Bagot
The Hartby includes a range of studio, one- and two-bedroom apartments. Image courtesy of Alex Staniloff of Gotham Interiors
The units blend modern design elements with historic features, such as arched windows and exposed brick walls. Image courtesy of Alex Staniloff of Gotham Interiors
Residents have access to a variety of amenities, including indoor and outdoor resident lounges. Image courtesy of Woods Bagot

But not every structure is a good candidate for conversion. Floorplate depth, structural load-bearing capacity and access to natural light all influence whether a building can reasonably and economically be turned into apartments. For example, traditional office buildings often have limited window exposure, complicating efforts to meet residential building codes. The key lies in structural compatibility and economic feasibility.

“In a lot of office buildings, the depth of the floorplates make it so the only way you can make it suited for residential use is to cut a giant hole in the middle of the building…which is generally going to be cost prohibitive,” said Property Resources Corp. Principal & CEO Matt Linde. In his view, older schools are among the best candidates for residential conversion. “The corridors are generally double-loaded already and they typically have large windows and high ceilings that make them attractive as apartments,” Linde added.

Preserving timeless beauty

When such structural feasibility aligns with funding and a clear vision, conversion projects seem easy. Property Resources Corp. worked alongside Avenue Realty Capital to transform a 19th century Catholic college into modern apartments. Located at 788 Willoughby Avenue in Bed-Stuy, Brooklyn, The Hartby encompasses 205 apartments that started leasing in April, with almost a third of them designated as affordable at 130 percent of the area median income. Residents have access to a roof terrace, parking, electric car charging stations, business center, gym, shared laundry room and bike storage.

“I would love nothing more than if The Hartby becomes our firm’s first pancake,” said Linde, using the analogy of the imperfect first attempt that leads to success down the line.

With adaptive reuse, developers can often create something with far more character and appeal than what their budget would allow for in new construction. Beyond this economic and aesthetic advantage, adaptive reuse also offers time-saving benefits. And faster delivery not only speeds up returns but also accelerates the impact on communities in desperate need of housing.

“At Baisley Pond Park, we were able to complete construction in just half the time it would have taken to build a new building,” Slate Property Group Managing Director John Valladares pointed out.

In just 18 months, Slate Property Group redeveloped the former JFK Hilton Hotel in South Jamaica, Queens, into 318 affordable apartments. The company worked alongside RiseBoro Community Partnership to deliver Baisley Pond Park Residences, which includes a garden, community spaces, a gym, a computer lab and laundry facilities, as well as a 5,000-square-foot social services suite.

But adaptive reuse is far from smooth sailing.

“Knocking a building down and creating a new one from ground up is 100 times simpler than taking an existing one and trying to make it work for modern apartment living,” said Linde.

Zoning laws, structural retrofitting and hidden surprises behind walls often derail budgets and timelines. Additionally, certain buildings need significant modifications to comply with residential standards, including upgrades like expanded plumbing, enhanced emergency exits or modernized HVAC systems. And while adaptive reuse can come with financial perks like historic tax credits, the path is often filled with regulatory and structural hurdles that must be navigated with precision.

The business of residential conversions

Whether a project pencils out depends on a delicate balance of cost, demand and structure. The risk-return profile of an adaptive-reuse project largely depends on the feasibility of the residential conversions.

“When an existing building has a layout that naturally lends itself to residential use… adaptive reuse can present a lower-risk investment,” Kore noted. However, projects that demand deep structural changes or extensive rezoning are often passed over in favor of new builds.

The success of adaptive reuse often hinges on public-private partnerships. Financial tools like tax abatements, historic tax credits and low-interest loan programs play a crucial role in making adaptive-reuse projects economically feasible. Cities like New York are stepping up with initiatives like City of Yes, aiming to streamline approvals and unlock development potential in long-dormant spaces.

“There is strong public-sector support in New York from both the city and state to support projects like these,” Valladares said. “We think these conversions will become more and more common across the country.”

The adaptive-reuse movement stands at the intersection of economic opportunity, social responsibility, flair and grit. “It takes a special type of deal junkie to look at an abandoned school and say: I bet we could turn this into something beautiful,” Linde concluded.