Intelligent Investment
Conversions & Demolitions Reducing U.S. Office Supply
June 3, 2025 2 Minute Read
Explore U.S. Office Conversion Projects
The reduction of total U.S. office inventory through building conversions and demolitions1 is on pace to far exceed new office space deliveries this year, helping to erode record-high availability and support the U.S. office market’s recovery.
Figure 1: Office Conversions and Demolitions vs New Supply Deliveries
Source: CBRE Research, CBRE Econometric Advisors, Q2 2025.
Among the 58 markets tracked by CBRE Research, 23.3 million sq. ft. of office space is on track for conversion to other uses (12.8 million) or demolition (10.5 million) this year, far outpacing the 12.7 million sq. ft. of expected new office supply.
Both demolition and conversion activity have accelerated since the COVID pandemic. The U.S. office conversion pipeline reached 81 million sq. ft. of planned and underway projects across 44 markets as of May 2025, accounting for 1.9% of total U.S. office inventory—up from 71 million sq. ft. in 42 markets and 1.7% of inventory just six months ago. The total excludes many rumored projects.
This conversion/demolition trend has gained momentum over the past decade. From 2018 to 2024, the U.S. averaged 58 office conversions annually. In 2024 alone, an annual record 94 conversion projects totaling 13.1 million sq. ft. were completed. This year, approximately 68 conversions totaling 12.8 million sq. ft. are expected.
Figure 2: Office Conversions by Construction Status & Estimated Year of Completion
Just over 70% of planned and active office conversion projects by square footage are to multifamily units. Office-to-multifamily conversions have delivered over 28,500 housing units since 2018, with another 43,500 expected if planned projects proceed. While impactful at the local level, this remains a modest contribution to the national housing supply. These conversions are driven by multifamily’s stronger fundamentals: The overall multifamily vacancy rate was just 4.8% in Q1 versus 19% for office, while average multifamily rents have climbed 21.3% since 2020 compared with just 1.4% for office. Cities are also easing regulations and offering incentives to address housing shortages and increase property tax revenues.
Office conversions to life sciences uses have declined from their pandemic-era peak, when they were the second most common type and new construction lagged demand. Hotels now rank second but represent just 8% of total office conversions by square footage.
Figure 3: Property Type Share of Underway & Planned Office Conversions by Square Footage
**Multifamily and Hotel include mixed-use projects anchored by the respective property type.
Source: CBRE Research, May 2025.
Conversion activity varies greatly by market, depending on building values, inventory age, construction costs and the availability of experienced developers. Manhattan and Washington, D.C.2 lead in total square footage of conversions underway or planned with 10.3 million sq. ft. and 9.2 million sq. ft., respectively. While both lead in part because of market size, conversions are also being spurred by local programs like the “City of Yes for Housing Opportunity” zoning reform in Midtown Manhattan and the “Office to Anything” program in Washington.
Cleveland stands out for having the highest share of its office inventory (8.4%) either undergoing or planned for conversion. The city’s long-standing experience with repurposing underperforming office buildings has given it a head start over other markets. High construction costs, low office rents and limited land availability have historically pushed Cleveland developers toward conversions, even before the pandemic.
Figure 4: Top Markets for Underway & Planned Conversions
Source: CBRE Research, May 2025.
Conversions of outdated office buildings are playing a pivotal role in revitalizing downtowns and shaping the future of cities. By breathing new life into underused spaces, these projects can spark economic activity and community vibrancy. However, not all buildings are suitable for conversion. Many office buildings constructed in the 1970s and 1980s have large floorplates that make them ill-suited for multifamily units. As a result, these older buildings account for more than half of demolitions and only 35% of conversions.
In cases where reuse isn’t feasible, cities should consider updating zoning policies to support demolition activity and new development or creation of public spaces. Older buildings with distinctive architectural features are frequently chosen for conversion, preserving their character and historical significance while meeting modern needs.
While conversions and demolitions will remain a focus for developers and cities in future years, the viability of these projects will remain challenged by factors such as building age, floor plate size and location. Rising construction costs, perhaps exacerbated by tariffs, along with less labor availability and persistently high interest rates, will add further impediments. As a result, many developers will likely wait for a more favorable economic environment to move forward with their plans.
2 The Manhattan market includes Downtown Manhattan, Midtown Manhattan and Midtown South. The Washington, D.C. market includes Downtown Washington, Suburban Maryland and Northern Virginia.
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