Are you cashing in on adaptive reuse?

Repurposing Vacant Office Space    

When office workers across the world went remote in 2020, few could have predicted the lasting ripple effects on the commercial real estate market. Years later, hybrid work remains the norm—and many downtown towers still sit half-empty. 

In 2024, the U.S. office vacancy rate reached 19.8%, the highest level since 1991¹. Once the cornerstone of urban economies, many central business districts are not faced with record vacancies and declining asset values. 

But amid this challenge lies a significant opportunity. Investors who think creatively about adaptive re-use are discovering ways to turn empty towers into thriving, future-proof assets.

In this month’s article, we’ll explore the forces driving the office vacancy crisis and examine the economics and logistics of repurposing buildings. We’ll also be touching base with Everest loan officer, Sam Fine, who will help us highlight how adaptive reuse is shaping the next era of urban investment.

The Office Market’s Ongoing Transformation

“The shift toward remote and hybrid work is no longer a temporary adjustment; it’s a structural change,” says Sam. “Some data suggests that less than a quarter of remote-capable employees work fully on-site².”

As a result, demand for traditional office space has sharply declined. In many major metros—from San Francisco to Washington, D.C.—vacancy rates are exceeding 25%. The economic impact of this is significant. In fact, some organizations are reporting up to 17% in year-over-year decline of property values.

But never fear! Your Everest experts are here!

Recently, we sat down with Sam and he assured us that not all properties will feel the weight of this change. This month, we’ll dive into our top tips for riding the wave of this moving commercial market. 

The Adaptive Reuse Opportunity

“Our investors are smart cookies,” says Sam. “They know that to adapt is to survive. And that’s the whole point of adaptive reuse.”

Adaptive reuse involves taking urban property assets and converting them into new property types that align with today’s demands. This might involve transforming a residential property into a mixed use space—or even a life science lab into a bustling logistics hub.

“Adaptive reuse is not a new concept,” explains Sam. “But it’s really gaining momentum in the post-pandemic landscape.”

When examining things economically, the idea certainly makes sense: rather than spending to demolish and rebuild from scratch, investors can leverage existing infrastructure to save on material, labor, and permitting costs. In fact, according to the Urban Land Institute, adaptive reuse projects can save 15-20% in development costs compared to new construction. They can also reduce project timelines by up to 30%.³

The New Wave of Adaptive Conversions 

Now that building conversion is gaining in popularity, we’re beginning to see a trend in specific buildings. The most common conversions emerging in today’s market include:

• • • • • • Office to Residential – Turning outdated office floors into housing, especially in markets with severe housing shortages

          • Office to Mixed-Use – Blending retail, coworking, and amenity spaces to create ‘live-work-play’ environments

          • Office to Life Science – Leveraging central locations for laboratories and medical research spaces

          • Office to Industrial – Transforming older, lower-rise properties located near transit corridors into logistics and/or manufacturing hotspots

“Just like people aren’t just one thing, their spaces shouldn’t be either,” Sam says. “With our help, commercial investors are beginning to understand that.”

So, what if you’re already sold on the idea? Should you just jump right in to investing in adaptive reuse? 

Before you do that, here are some top considerations:

3 Considerations for Adaptive Reuse Investors

“While adaptive reuse can offer high returns in the right hands, it also brings unique complexities that aren’t as common in other areas of real estate,” explains Sam. “This is where your Everest team can step in and help guide you in the right direction.”

1. Budget & Structure – Before converting a space, be sure to conduct a rigorous analysis of structural requirements and financing compatibility in comparison to your goals for the space. Many older buildings lack plumbing, window access, or layouts suitable for residential or mixed-use design. This can make updates (and financing) complicated.

2. Zoning & Coding – One of the biggest hurdles in urban development, many downtown areas are still zoned strictly for commercial use. Ordinances are slowly updating, but investors must work closely with local planning departments to secure approvals.

3. ESG & Sustainability – Depending on the updates you are looking to make to the space, you may be able to secure institutional capital willing to support building upgrades that enable environmental advantages. Sustainability-linked loans and green bonds are also gaining traction. 

4. Market & Demand – While demand for office space continues to decline, the supply of viable conversion candidates continues to soar. The next few years in particular could represent a rare window to acquire undervalued properties before the market stabilizes. Keep an eye on the end-user demand for your area to help determine course of action.

5. Public & Organizational Incentive – Many municipalities and organizations are offering financial support for conversions through grants, tax abatements, or low-interest financing in order to encourage downtown revitalization. Keeping track of these programs can significantly improve project ROI.

“The key here is to stay alert,” says Sam. “Keep an eye on those numbers and trends—and don’t be afraid to seek out expert opinions to decode some of it. There is a lot of information out there.”

The Bottom Line: Turning Vacancy Into Value

If you’re still on the fence about adaptive reuse, just remember that it is not the end of the downtown city story. It’s just the start of a new one. The transition from traditional office towers to vibrant, multi-purpose spaces is already underway, reshaping the commercial real estate landscape in ways that align with the specific needs of modern culture.

For investors willing to embrace the innovation, it can become a strategic advantage. With thoughtful planning, creative design, and collaboration between public and private sectors, yesterday’s empty towers can become tomorrow’s most dynamic investments. 

Everest says: When the market calls for change,

 we’re ready with data-driven strategy.

Everest Equity

Helping You Grow Your Real Estate Portfolios Across 

The United States Since 2004

Join the ranks of Everest’s top-performing commercial investors today!

Connect with a loan officer to finance your goals.