Repurposing old buildings into apartments may not be an exciting new concept, with its roots dating back to the 1950s. But what should capture your attention is that this trend has continued to grow, with almost 800 conversions over the last decade in the United States. That is about 300 more conversion projects in the 2010s than was seen in the early 2000s. Factories and office buildings have been the most popular types of apartment conversions in the past decade.
Why is this trend taking the real estate market by storm?
Apartment conversions allow cities to:
- Fill the need for more affordable living space in already dense urban areas (65% of conversions are aimed toward middle to low-income renters).
- Repurpose all types of buildings, such as old hotels, factories, schools, healthcare, and office buildings, etc.
- Revitalize struggling neighborhoods or industrial & business corridors.
- Preserve and restore buildings of historical significance.
Apartment conversions allow developers to:
- Acquire properties with highly desirable locations (i.e. hotels and office buildings are often in downtown, central metropolitan locations).
- Purchase the less desirable building at an incredibly discounted price.
- Significantly increase the overall value of the property because multi-family properties are typically more desirable an asset than the original building format.
Apartment conversions are also easier for developers to execute. According to Pat Vassar, Ignite Funding’s Director of Underwriting, “The bones of the buildings they are repurposing are similar enough to apartments that it makes for an easy transformation.”
Ignite Funding constantly monitors real estate trends to secure opportunities for their investors to optimize their individual real estate portfolios through diversification. Ignite Funding enables investors to diversify across states/regions, borrowers, development phases (i.e. acquisition, horizontal development, vertical construction, or rehabilitation) and asset type.
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