Developers repurposing old buildings to add to housing supply
COLUMBIA, Mo. (KMIZ)
As the housing gap continues across the nation, developers are increasingly looking to old buildings through a growing trend called adaptive reuse.
Adaptive reuse sees non-residential buildings, such as hotels, offices, and schools, converted into apartments. RentCafe reported that, in 2024 alone, close to 25,000 new apartments were completed nationally from adaptive reuse projects. This is over, 8,000 more units than the prior year.
According to Realtor.com, new home construction fell short of demand last year, leaving the U.S. housing supply gap at around 4.03 million homes in 2025.
The National Low Income Housing Coalition also reported a shortage of over 127,000 affordable rental homes in Missouri.
"Much of what's been in the headlines has talked about the demand side of housing, which does very little for addressing the cost and the supply side," said Doug Ressler, manager of business intelligence at Yardi Matrix.
The National Association of Home Builders reported that inflation in the global economy has increased the costs of building materials. They found construction costs for a new home accounted for 64.4% of the average price of a new home in 2024, compared to 60.8% in 2022.
A separate study found that the average cost of a single-family home in 2024 was over $428,000. In 2019, the same home cost around $296,000. Despite that sharp increase in prices, the report says builders’ profits rose only slightly over the same period from 9.1% to 11%, a range similar to where construction profits were even two decades ago.
"So the housing demand or the household formation continues to increase, so what's happening is that people are beginning to look at underutilized or vacant properties," Ressler said. "What we have found is that governments that work in collaboration with business, the community, are much better suited to be able to provide housing in those areas that are under a lot of stress."
RentCafe reported that of the 2024 adaptive reuse projects,37% of structures started as hotels, followed by office spaces at 24% and industrial buildings at around 19%.
The Construction Management Association of America also reported that existing buildings account for about 42% of global carbon emissions. Using existing properties helps keep emissions down and gives builders opportunities to add eco-friendly facilities to dated buildings.
"I'd say we've been involved in a half a dozen and multiple states," said Jason Maddox, the
president of Midwest-based MACO Development Company. "We've done a hotel, we've done downtown buildings, a bank conversion, but it seems like the school buildings work a little better."
Ressler said the historic context of buildings even helps with more affordable housing projects.
"There's a lot of vacant buildings and many of those buildings are quite old; they can qualify for historical preservation loans," Ressler said. "What we see, especially in affordable housing, is you can stack loan monies in terms of being able to pencil out, make it affordable."
A MACO project, the Carver School Apartments in Fulton, which added 33 affordable senior apartments to the city's housing stock in December of last year, used $766,000 in federal historic preservation tax credits. Maddox said the construction cost around $8 million and the project received around $8.2 million in federal housing credits and $3.7 million in state housing credits.
Other recent adaptive reuse projects in Mid-Missouri include the Tannehill Apartments in Moberly that added 40 affordable senior housing units in Feburary and the Benton School project in Marshall, which is expected to add 17 apartments.
"We are able to determine if there's a housing need there and if we're able to do this and help to meet that housing need and also to preserve that structure at the same time," Maddox said. "It's a win-win."
Tune in to ABC 17 News at 10 p.m. Sunday to get a behind-the-scenes look at how these adaptive reuse projects develop.
