Jun 8, 2024 - Real Estate

Inside a Duluth high school-turned-apartment building

modern apartment kitchen with natural light

Photo: Courtesy of Saturday Properties

Going back to school isn't easy, but what if there were no classes, unlimited pickleball and views of Lake Superior?

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

  • 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 are on the table.

Zoom in: Some of Minnesota's shuttered schools are already being flipped, including one in Duluth which opened earlier this year.

  • Developers also converted a school into apartments in Albert Lea, about 90 miles south of the Twin Cities.

What they're saying: School buildings can offer more of the natural light renters want, compared to offices and brand-new construction, says Mark Laverty, chief development officer at St. Louis Park-based Saturday Properties.

  • The Duluth high school-turned-122-unit apartment complex his firm owns was nearly 75% leased ahead of its grand opening in late May, Laverty tells Axios.
living room with wood apartment panels
Photo: Courtesy of Saturday Properties
old school building
Photo: Courtesy of Saturday Properties

While turning cafeterias and gyms into homes is easier said than done, state and federal historic preservation tax credits can make them feasible.

  • Conversions in general are complex, expensive and often hampered by local building restrictions.

Locker-lined hallways, tall windows and an indoor pickleball court represent some of the draws of living at Zenith DCHS Apartments.

The vibe: "We naturally had these really great corridors and gathering areas," says Alex Haecker, whose Minneapolis-based architecture firm designed the project, which converted Duluth's Richardsonian Romanesque-style Central High School.

  • This past week, rents started at $1,265 for a studio, $1,391 for a one-bedroom, $2,199 for a two-bedroom and $2,999 for a three-bedroom.
Stacked column chart shows the annual percentage of U.S. apartment conversions from former schools and churches from 2000 to 2023. The share of school conversions fluctuated over the years, peaking at 13% in 2000 and 11% in 2017. Church conversions remained relatively low, peaking at 3% in 2022. In 2023, the share of apartment conversions was 3% from schools and 0% from churches.
Data: RentCafe; Chart: Simran Parwani/Axios

State of play: Several factors contributed to historical jumps in school conversions since 2000, including declining enrollment in some school districts and heightened interest in city living and historic preservation, according to RentCafe.

  • The 2008 financial crisis also led more developers to consider repurposing existing buildings like schools to reduce construction costs, research analyst Veronica Grecu tells Axios.

What we're watching: No churches were converted in 2023, per RentCafe's analysis of Yardi Matrix data, though the Twin Cities area has seen some adapted for housing in recent years.

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