Jun 8, 2024 - Business

School's out, apartments are in

Axios Visuals: 2024-05-27-apartment-conversions
Data: RentCafe; Note: Includes buildings with at least 50 units; Chart: Simran Parwani/Axios

Your next apartment could be inside an old school.

The big picture: Shuttered schools accounted for 3% of U.S. apartment conversions in 2023, data shared with Axios shows.

  • Former offices and hotels dominate the national conversion trend, comprising 28% and 36% of newly completed projects, according to a RentCafe analysis.

Why it matters: As cities and developers seek to repurpose empty space into much-needed housing, a mix of building types is on the table.

What they're saying: School buildings can offer more of the natural light renters want, compared to offices and brand-new construction, developers say.

Zoom in: Younger renters covet the tall ceilings, windows and antique cabinets that come with living in a Gilded Age school, says Nick Vittore, a developer of three such projects in Chicago in recent years.

  • "The market loves it," Vittore tells Axios. "People were fighting over [the bookshelves], saying, 'Can you move this one up to this apartment?'"
Apartment in former classroom with original cabinet and brick walls
The Mulligan School Apartments in Chicago. Photo: Courtesy of Svigos Asset Management

Views of Lake Superior and an indoor pickleball court represent some of the draws of Zenith DCHS Apartments, formerly a Richardsonian Romanesque-style high school in Duluth, Minnesota.

  • "We naturally had these really great corridors and gathering areas," says Alex Haecker, whose architecture firm designed the project.
  • The 122-unit building was nearly 75% leased ahead of its grand opening in late May.

While turning cafeterias and gyms into homes is easier said than done, state and federal historic preservation tax credits can incentivize school flips.

Reality check: Conversions in general are complex, expensive and often hampered by local building restrictions.

Yes, but: The projects are "a testament to sustainable design," preserving buildings' heritage while minimizing the environmental impact of demolition, says Doug Ressler of real estate research firm Yardi Matrix.

Between the lines: Businesses closing or downsizing during the pandemic created many vacant commercial spaces, sparking a surge in conversions.

Flashback: After stalling amid the 2008 recession, conversions picked up in the 2010s, partly because of new financing incentives and the increasing need for affordable housing options, researchers say.

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