According to CBRE’s Office Conversions brief, nearly 70 million square feet of office space or 1.7% of total U.S. supply was undergoing conversion to other uses in Q1 2024, up from 60 million square feet or 1.4% of total supply in Q3 2023.
Office-conversion completions are expected to more than double this year over last. And with hundreds more of these projects in the pipeline, many urban office centers are slowly being transformed into more vibrant, commercially diverse districts.
Approximately 120 office-conversion projects nationwide — one-third of them to multifamily — are expected to be completed this year, compared with an annual average of 45 between 2016 and 2023. This pipeline indicates higher-than-average conversion completions over the next several years.
In Colorado, there were 16 office-conversion projects recorded as of Q1 2024. Nine of those projects were office to life science conversions and five were office to multifamily.
Although converting mostly vacant office buildings to more marketable uses such as housing appears to be a simple solution, the high cost of such projects is often prohibitive. Conversion costs generally range between $250 and $650 per square foot, depending on the complexity of the project. High interest rates are an additional challenge, although CBRE expects rates will begin to fall later this year.
Check out CBRE’s interactive map here: https://mapping.cbre.com/maps/US-Office-Conversion/2024/
