Jul 6, 2026
Office space started sitting vacant during the pandemic while affordable housing supply became scarce. After six years, the situation still hasn’t changed.
“Cities across the country are dealing with two parallel problems. One, there’s too much empty office space, and two, there’s not enough housing,” says NPR host Ayesha Rascoe.
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The National Low Income Housing Coalition says that a 7.2 million affordable housing unit shortage exists. (The overall housing shortage isn’t quite as dire — and we’re headed toward a 3 million housing surplus in the next two decades).
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Meanwhile, according to commercial real estate investment firm CBRE, approximately 19% of offices are vacant as of Q1 2026. That’s a lower vacancy rate than it’s seen in recent years, but it’s still far higher than pre-pandemic levels.
It begs the question. Should vacant offices be converted to fill in the gap in much-needed affordable housing? Here’s what to know about America’s silent real estate crisis.
Converting office space into apartments is difficult but not impossible
Office vacancy rates vary depending on the city. According to CBRE, cities like Chicago, Dallas-Fort Worth, and Seattle have high vacancy rates of almost 30%, while Manhattan has an overall vacancy rate of 12.4%.
Dallas-Forth Worth is also fourth on the list of cities with the worst affordable housing shortages for extremely low-income households. Chicago reports only 31 affordable homes for every 100 households in need of it. Washington state also has one of the worst housing markets in the country.
Why aren’t these cities converting their unused offices into apartments? Actually, they are. But not fast enough to solve the housing affordability crisis. The converted units may also not be enough on their own.
Chicago and Dallas were both in the top five cities in terms of how many offices were being turned into apartments. For Dallas, almost 80% of its adaptive reuse projects involved office conversions. But it’s still not enough to address the housing crisis in each city.
“Office-to-residential conversion is not going to solve the housing crisis,” Tracy Loh, a fellow at the Brookings Institution, told NPR.
There are two main reasons that office spaces won’t be able to solve the affordable housing crisis: one, it can be difficult to find office spaces that would make for good apartments, and two, building affordable housing isn’t very profitable.
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“We would love to do more affordable housing,” says Matt Pestronk, president of the development company Post Brothers. “Unfortunately, almost all capital seeks a return.”
Post Brothers has a history of developing office-to-residential conversions in Washington, D.C.; it’s currently working on the largest office conversion in the city to date. They project the average rent for a one-bedroom in the new complex will cost around $4,000 per month, although they’ve set aside around 60 units for affordable housing.
The Urban Institute suggests implementing policy changes to promote more office-to-residential conversions, such as offering tax credits or making the permitting process easier.
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Empty office buildings are a problem for more than just landlords
Office vacancy, of course, is a problem for people trying to sell or rent out offices. But empty offices aren’t just bad for landlords.
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If landlords aren’t able to earn revenue off of their office spaces, then they’ll struggle to pay back the loans they took out to purchase the real estate. NPR reports that there’s approximately $1.2 trillion dollars tied up in office loan debt.
It’s a significant amount of money for the banks that financed office owners. And it also spells trouble for local business owners who rely on office workers to make money in what CBS calls the “urban doom loop.”
“I think that it’s bad for business. It’s bad for cities. It’s bad for people,” says Marc Holliday, CEO of SL Green Realty.
Companies seeking to rent office spaces are the biggest winners here; they get to rent for significantly lower rates than they would in a more office-friendly environment. But that discount means that local governments aren’t making as much in property tax as they might have originally budgeted for.
“In the long run, property taxes on those buildings will also fall… and these commercial property tax revenues are an important component of the budget for local governments,” said Stijn Van Nieuwerburgh, a real estate professor at Columbia Business School. That means “less money for police departments, public safety, less money for sanitation, trash collection.”
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Kit Pulliam is a DC-based financial journalist with over five years of experience writing, editing, and fact-checking financial content.
