CBRE Finds Office Conversions More Than Doubling

(Image courtesy of CBRE)

CBRE, Dallas, found nearly 100 office-conversion projects are slated to be completed in major U.S. cities this year. That’s more than double the average of 41 per year from 2016 to 2022.

There are currently 60 million square feet of office conversions planned or underway, or 1.4% of total U.S. office inventory. That number stood at 1.2% in fourth-quarter 2022.

About half of those projects are for multifamily buildings, at 48%, followed by life sciences at 19%. Transformation into mixed use space are 18% of ongoing or planned projects. There are smaller numbers of hotel and industrial conversions.

Cleveland has the highest percentage of its office inventory either under conversion or planned, at 11%, followed by Cincinnati, Boston, Houston, San Francisco, Chicago, Northern/Central New Jersey, Dallas/Fort Worth, Washington, D.C., and Manhattan.

“Converting offices to other use types is a complex process with many different moving parts,” said Mike Watts, CBRE President of Investor Leasing. “When state and local governments are supportive of the projects, it signals to developers that efforts are underway to make the process more financially feasible and predictable. The growing trend around conversions may help to revitalize downtown areas that have been affected by changing workstyles that result in less need for office space.”