A Huge Demand for Housing Leads to a Spike in Multifamily Conversions
Oct 26, 2021 | Bendix Anderson
Apartment developers will create more new apartments in 2021 in old office, retail and hotel buildings than any time in last decade.
The pandemic didn’t slow down apartment developers who adaptively reuse old buildings. Rising apartment rents allow investors to spend more to buy and redevelopment old buildings—income from the finished apartments should eventually pay for the high cost of development.
“We will likely see a fair amount of this—redevelopment and converting properties to apartments—over the next few years,” says John Sebree, senior vice president and national director of multifamily for Marcus & Millichap, working in the firm’s Chicago offices. “That is the result of being in a housing crisis, and without new product being built at the same pace as demand.”
Developers are likely to finish a record 20,100 new apartments in 2021 in buildings converted from other uses, according to Yardi Matrix. That will make 2021 the busiest year for conversions in the last 10 years. It’s also up sharply from an average of about 12,000 a year over the last five years.
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