Over the past decade, corporate real estate (CRE) has undergone seismic shifts, but few developments illustrate the transformation as vividly as the rapid rise of office conversions and adaptive reuse. For much of the 20th century, skylines were defined by new construction—taller, sleeker towers symbolizing growth and prosperity. Today, however, the industry is grappling with a new reality: in many markets across the United States, more office square footage is being demolished or repurposed than built anew.
This shift is not simply about vacancy rates or cost pressures; it reflects a deeper reimagining of how we use, value, and sustain our built environment. According to CBRE and CoStar data, developers are expected to remove 23.3 million square feet of office space by the end of 2025, through either conversion or demolition—nearly double the amount of new space projected to come online the same year. Adaptive reuse, once a niche strategy, has now moved firmly into the mainstream.
Why Conversions Are Accelerating
The reasons behind this acceleration are multifaceted. The rise of hybrid and remote work has fundamentally altered demand, leaving many buildings—particularly older Class B and C properties—struggling to attract tenants. At the same time, companies that are seeking space increasingly prioritize a “flight to quality”: modern, sustainable buildings with wellness certifications, flexible layouts, advanced digital infrastructure, and strong ESG credentials. Outdated stock, by contrast, has become increasingly obsolete.
Economic conditions also play a decisive role. With construction costs and interest rates elevated, speculative new builds are often too risky to justify. Cities, meanwhile, are responding to both housing shortages and hollowed-out downtown cores by offering incentives to repurpose underused offices as residential units, mixed-use developments, or life sciences hubs. As Engineering News-Record recently reported, municipalities from New York to San Francisco are backing conversions as a means of “revitalizing communities and addressing urgent housing needs.”
Finally, sustainability pressures are making adaptive reuse an attractive option. Reusing an existing structure not only reduces embodied carbon but also demonstrates tangible progress against ESG commitments—an increasingly important priority for investors, regulators, and employees alike. In a moment where ESG has shifted from “nice to have” to a market expectation, adaptive reuse positions CRE leaders at the forefront of environmental stewardship.
Challenges Along the Way
Yet adaptive reuse is far from a silver bullet. Converting offices into housing, for example, is complex. Many towers have floorplates too deep to accommodate natural light in apartment layouts, while ceiling heights and mechanical systems may be incompatible with residential standards. Zoning restrictions and permitting processes vary widely by jurisdiction, often slowing down projects.
Financing remains another hurdle. Even when adaptive reuse appears more efficient than ground-up construction, retrofits can require extensive capital. Success often depends on a delicate balance of private funding, government incentives, and strong execution. Without the right structures in place, well-intentioned projects can stall or underperform.
The Strategic Opportunity
Despite these challenges, the opportunity is undeniable. RentCafe projects that more than 70,000 new apartment units will be delivered in 2025 from office conversions alone—nearly triple the number from just a few years ago. And high-profile projects like New York’s 25 Water Street, slated to become one of the largest office-to-residential conversions in the country, are capturing the imagination of policymakers, developers, and communities alike.
For corporate real estate leaders, the lesson is clear: adaptive reuse must be considered not only as a tactical response to distressed assets but as a strategic pillar of portfolio management. The most forward-looking organizations are already assessing their holdings to determine which assets can be converted, which should be modernized, and which may need to be divested altogether.
At SIREAS, we have seen firsthand how early planning, thoughtful governance, and well-structured sourcing strategies can turn potential liabilities into long-term opportunities. Whether it’s negotiating commercial models that share risk, designing transition roadmaps for multi-phase projects, or embedding sustainability targets into service contracts, our role is to ensure that clients can navigate the complexity of adaptive reuse with clarity and confidence.
A Look Ahead
The message is clear: the future of real estate will not be defined by how much we build, but by how creatively we reimagine what already exists. For organizations willing to embrace this shift, adaptive reuse represents more than a necessity—it is a chance to align portfolios with evolving demand, advance ESG goals, and unlock entirely new sources of value.
As we mark SIREAS’ ten-year anniversary, the rise of office conversions offers a powerful metaphor for the broader transformation of our industry. Ten years ago, client conversations centered on outsourcing models and efficiency. Today, they revolve around agility, innovation, and resilience. Just as the CRE industry is reimagining its buildings, we have reimagined our approach to client partnerships—always adapting, always looking ahead.
The next decade promises no less change than the last. Those who act boldly, think creatively, and partner strategically will be the ones to turn empty towers into new possibilities.
