Market Views

CRE Trends - Home Became the Office, Will the Office Become Home?

As real estate developers respond to what we believe is likely a new normal, are we on the cusp of a repurposing revolution in commercial real estate?

by CrowdStreet

As noted in a recent Wall Street Journal article, US cities are lagging their peers in Europe and Asia in regards to employees returning to the office 1 . This begs the question, as real estate developers respond to what we believe is likely a new normal, are we on the cusp of a repurposing revolution in commercial real estate? In addition to reducing the demand for office space, fewer workers in the office generally reduces demand for ancillary services - restaurants, brick-and-mortar retail, health clubs and other businesses catering to the commuting crowd, as well as public transportation. This trend is best seen in Washington, D.C., where the General Service Administration, the agency responsible for managing the US Government’s office space and the nation’s largest office tenant, is rapidly reducing its footprint as more workers shift to remote work 2 .

With many commercial spaces sitting empty, and some city officials looking to revitalize their downtowns and manage housing shortages, we are seeing the concept of converting commercial-use properties to residential is becoming more common. While not new - the Trump International Hotel & Tower conversion took place in New York in the 1990s 3 - we believe the idea is uniquely suited to today’s environment. These conversions potentially address multiple issues, including the need for the tax revenues and a shortage of housing supply. Other factors playing into this trend include older offices potentially becoming obsolete as office tenants generally look for modern amenities and a general desire for the residential “walkability” that comes with urban living.

The Urban Land Institute (ULI) and National Multifamily Housing Council (NMHC) recently completed an in-depth study, Behind the Facade: the Feasibility of Converting Commercial Real Estate to Multifamily Housing that points to both challenges of these conversions and the successes 4 . Challenges included dealing with deferred maintenance issues, providing natural light, accommodating parking and dealing with issues that aren’t known until the walls are opened. With financing typically accessible, often aided by tax credits or incentives, projects cited in the study typically performed well versus their pro forma targets, although pandemic-related cost overruns were cited by several.

In addition to developers who have already completed conversions, the ULI and NMHC study found many developers studying what is needed to succeed and points to institutional and private capital investing in this conversion market. Given that, we expect to see an increase in similar deals presented to CrowdStreet, with those that pass our due diligence process coming to our platform this year. We look forward to presenting these opportunities to the CrowdStreet investor community.

Questions? We're here to help. You can reach out to our investor relations team at


In addition to more general risks such as high vacancy rates, oversupply of product in the market, and credit quality of tenants, some of the factors that can impact the success or failure of multifamily investments include competition from single-family homes, fluctuations in the average occupancy rate, and increases in mortgage rates that can make debt financing more expensive. 


Group 2010204
Get the word on the street.

Sign up now for our newsletter to discover key insights, market analysis updates, and expert opinions.

You're In!

Thanks for signing up for our monthly newsletter.