Apartment conversions are mounting a serious comeback, with more than 20,100 such projects set to be finalized this year. That’s more than double the number of conversions that were completed in the past two years combined.
Of those slated for construction, 42% are former office buildings, accelerating a trend analysts first noted in the 2010. Former office buildings a quarter of projects in which more than 52,700 units are expected to become available in 2022, according to a RentCafe analysis of Yardi Matrix data.
“That’s 12,300 rental apartments in the pipeline to match the 13,250 that have already been converted in the last two years,” RentCafe’s Alexandra Ciuntu says. “Notably, work-from-home arrangements that came as a result of the pandemic also spurred office transformations nationwide, although these weren’t as abundant as hotel redevelopments in the wake of the hospitality industry crisis.”
The trend toward office conversions is a significant departure from the last decade, when hotel conversions were en vogue. This is at least in part motivated by a demand for open floor plans and out-of-the-box designs, which hotel footprints couldn’t offer. Factories are also popular conversion structures and accounted for 4,350 conversions last year.
Hotels remain popular investment choices, however, and investors are continuing to allocate capital to such projects. In April, for example, TF Management Group launched a fund to focus on hotel-to-apartment conversions that included targets like two extended-stay Residence Inn conversions to housing in Winston-Salem, NC and South Bend, Ind., two Ramada Inn conversions in Mesa, Az., and New Braunfels, Texas, a Best Western hotel conversion in Longmont, Col., and a transformation of an office building to multifamily housing in downtown St. Louis near the Cardinals ballpark.
A total of around 11,800 apartment conversions were delivered in 2020, double the number converted a decade prior.
“Perhaps the most compelling reason to choose adaptive reuse for apartments versus new apartment construction is the lower environmental impact, especially if demolition is involved,” Emil E. Malizia, PhD, CRE, of the Department of City & Regional Planning, UNC at Chapel Hill told RentCafe an in an interview. “Adaptive reuse mitigates climate change; demolition and new construction do not.”
The strategy is also cost-effective: some estimates predict conversions save between 30 and 40% in construction costs as opposed to new construction projects.
Philadelphia and Washington, D.C. have converted the most units in 2020 and 2021 combined, while Los Angeles and Cleveland have the most projects lined up beginning in 2022.
A total of 306 future redevelopment projects that will create 52,700 apartments are slated for 2022 and beyond, according to Yardi projections.
https://www.globest.com/2021/10/08/apartment-conversions-come-roaring-back/
No comments:
Post a Comment