Does Office-to-residential Conversion Size Matter?
Office-to-residential conversions are no longer a niche. According to RentCafe data reported by Construction Dive, the national conversion pipeline reached 90,300 units in early 2026, up 28% in a year, and Chicago ranks third nationally with 4,360 units. Yet for every building that converts, many more are studied and abandoned. The most common reason is not the market, the zoning, or the capital stack. It is size.
Size shapes a conversion in three distinct ways: the size and depth of each floor, the size of the overall building, and the size of the units the building can produce. Get any of the three wrong and even a building bought at a deep discount will not pencil.
Floor Plate Size Decides What Is Possible
The single most important dimension in a conversion is the distance from the exterior wall to the building core. Offices can put workstations 60 or more feet from a window. Apartments cannot. Every bedroom needs natural light and a window for emergency egress, and residents will not pay for units that are dark at the back.
The research is consistent on this point. A New York City Comptroller analysis cites a window-to-core distance of more than 60 feet as the threshold at which conversion generally becomes infeasible. A NAIOP analysis found that the office buildings that have converted most successfully are rectangular, with floor plates of roughly 8,000 to 12,000 square feet, and that H, I, and L-shaped buildings work well because they keep more of each floor close to an exterior wall.
This is why age and size are linked. The same NAIOP research found that completed conversions averaged 93 years old. Prewar buildings were designed around daylight and operable windows, which produced narrower floors. Postwar towers, built for fluorescent lighting and central air, grew much deeper.
Deep floors can still be solved, but only with major surgery. At 25 Water Street in Lower Manhattan, the largest completed office-to-residential conversion in U.S. history at 1.1 million square feet and 1,320 units, the design team cut two full courtyards out of the building’s interior to bring light to the core, then added the lost area back on top of the building. Architect Eugene Flotteron walked through that approach on the Real Finds Podcast. It worked, but it required scale, New York rents, and a state tax incentive to justify the cost.
Building Size Cuts Both Ways
Overall building size creates a tension that owners and investors need to understand before they underwrite.
Why Bigger Can Be Better
Conversions carry large fixed costs that do not scale down with the building. Design, entitlements, environmental remediation, new elevators, facade work, and a full replacement of plumbing and mechanical systems must be paid for whether a project produces 100 units or 400. Spreading those costs across more units lowers the cost per door. Larger buildings can also support shared amenities like fitness centers, lounges, and rooftop space that help justify higher rents. At 25 Water Street, roughly 100,000 square feet of amenities were carved largely out of existing office infrastructure.
The economics are unforgiving at small scale. Chicago’s first completed LaSalle Street Reimagined conversion, Bellwether Residences at 79 W. Monroe, cost $64.2 million to deliver 117 apartments, according to the Chicago Sun-Times. That works out to more than $540,000 per unit, closed in part with $28 million in tax increment financing.
Why Bigger Can Also Be Riskier
Scale has a cost of its own: absorption. A 1,000-unit conversion in a market without Manhattan’s depth of renter demand can take years to lease, and every vacant month adds carrying cost on a building that has already given up its office income. Larger projects also require larger equity checks and more complex financing at a time when capital for conversions remains selective.
Chicago’s program reflects that balance. The LaSalle Street Reimagined proposals range from 117 units at 79 W. Monroe to roughly 430 units at 135 S. LaSalle, rather than the 1,000-plus unit projects seen in New York. Flotteron noted on the podcast that markets outside New York often lack the absorption velocity for full residential programs, which pushes many conversions toward mixed use.
Partial Conversions Split the Difference
One answer to the size question is not converting the whole building. Bellwether converted only floors seven through 14, while a charter school and a Walgreens remain on the lower floors. That approach keeps stable income in place, reduces the number of residential units the market has to absorb at once, and lets owners convert the portions of a building with the best light and views while keeping deeper or lower floors in commercial use.
Unit Size Determines the Revenue
The final dimension is the size of the apartments themselves. Office floors rarely divide evenly into residential units, and the geometry of the floor plate largely dictates the unit mix. The NYC Comptroller found that conversions in the city’s pipeline averaged roughly 860 gross square feet per unit.
Deeper floors tend to produce larger units, because the extra depth has to go somewhere, often into interior dens, oversized closets, or windowless flex rooms. Larger units lower the total unit count, which raises the cost per door and can push rents beyond what the local market will bear. Narrower floors allow more studios and one-bedrooms, which lease faster in downtown markets and generate more rent per square foot.
The gap between cost and value is the core challenge. NAIOP’s research estimated hard retrofit costs of $250,000 to $300,000 per unit against average multifamily values just under $240,000 per unit at the time of its analysis. Every design decision that adds units without sacrificing livability narrows that gap.
What This Means for Chicagoland Owners
For owners of older office buildings in the Loop and across Chicagoland, size is the first screen, not the last. Before running a pro forma, owners should measure window-to-core distances on every floor, test whether the plate can be divided into marketable units, and consider whether converting part of the building makes more sense than converting all of it. The full screening framework is covered in Finding The Right Building For Office-To-Residential Conversion.
Basis still matters. Distressed trades like those examined in 401 S. State Street Sold Out of Distress and the residential conversion of 65 E. Wacker Place show how a reset price can bring more buildings into range. But no discount can fix a floor plate that is too deep or a building too small to carry its fixed costs. For the broader market context, see the State of the Chicago Office Market for Q3 2026.
If you own an older office building and want to know whether its size makes it a conversion candidate, a repositioning opportunity, or a sale, Van Vlissingen and Co. can help you run that analysis. Explore our landlord representation services and full range of commercial real estate brokerage services, or email [email protected] to start the conversation.
Van Vlissingen and Co. has been the Midwest’s oldest commercial real estate brokerage, development, and management firm since 1879, and today is independently ranked the #1 commercial real estate agency in Chicagoland, home to the #1 independently ranked agent, Gordon Lamphere, and the region’s #1 ranked commercial property management team. If you own, manage, or invest in energy-adjacent, mixed-use, or transit-oriented property across Lake County, the North Shore, the Northwest and O’Hare corridors, DuPage and the I-88 corridor, Will County, or southern Wisconsin’s Pleasant Prairie, Kenosha, and Racine markets, contact Van Vlissingen and Co. at 📞 847-634-2300 or 🌐 vvco.com. For a market-wide view of where these dynamics sit today, see our State of the Chicagoland Commercial Real Estate Market for Q3 2026.