Renovations of Older Building To Create Updated Multifamily Housing

The pandemic has accelerated the demand for multifamily housing. Investors are anticipating high returns by converting older office, hotel, and retail space into apartments.  According to Yardi Matrix the number of new multifamily housing created by converting existing buildings is growing steadily. 

Repurposing buildings are generally less expensive that building new multifamily housing from the ground up. 

“One estimate could be that renovations could cost about 30 to 40 percent less than new construction for the same number of units,” says Emil E. Malizia, a research professor in the Department of City and Regional Planning at the University of North Carolina at Chapel Hill, told Wealth Management. “Total development cost per unit should be less as long as the cost of the site and building is not significantly more expensive than the cost of site acquisition for new construction.”

The pandemic hit retail and hotels hard, making it easier to obtain these buildings and adapt them for reuse. Because of the existing utilities and floor plans makes them easy to convert them for residential use. Many tenants prefer these out of the box designs with open layouts.

“Strong demand and limited inventory of all types of housing are keeping occupancy strong in multifamily properties across the country,” said Justin MacDonald, chairman of NAHB’s Multifamily Council. “For that same reason, we have seen robust production of new multifamily properties, although developers continue to deal with very significant supply-side challenges, like finding enough labor, materials, and land to build on.”

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