Solution For Chicago's Empty Office Buildings Could Be Microapartments, Study Says

Converting vacant office buildings into residential co-living units — akin to dorm-style housing — would help solve a trio of real estate problems bogging down Chicago, as the city tries to revitalize its downtown corridor.

That’s according to a study by architecture firm Gensler and the Pew Charitable Trusts. The report, released Monday, looks at the feasibility of flexible co-living spaces in Chicago’s Central Business District.

The study is part of a series analyzing 10 U.S. cities, including Chicago, and how office conversions could solve each city's housing problems. Pew Charitable Trusts, a nonprofit based in Philadelphia, connected with Gensler about a year and a half ago to start the series of studies.

Pew Project Director Alex Horowitz said it was clear how “underwhelming” office-to-residential conversions were in the years after the pandemic, when office vacancy rates skyrocketed. High construction costs coupled with the number of units that could be created by conversions led the nonprofit to research cheaper, more productive alternatives for downtown office buildings.

Its co-living model proposes microapartments with private bedrooms and personal storage, plus shared facilities like kitchens, living spaces, bathrooms and laundry on each floor. Building owners could also explore partnerships with local colleges and medical facilities to lease out individual floors.

“In D.C., a lot of people in their 20s end up sharing houses, especially row houses,” Horowitz said. “You’ll have four, five, six people in their 20s sharing a house because it’s too expensive to afford a studio apartment. So, maybe dorm-style housing could work for office-to-residential conversions.”

Gensler and Pew narrowed their focus on cities like Chicago that don’t have massive hurdles for these types of conversions. It has released reports on Denver, Seattle, Minneapolis, Houston, Los Angeles and Washington, D.C., with reports on other cities coming later this year.

The biggest barrier to conversions in Chicago is the requirement for residential projects to have operable windows, Horowitz said. But the city launched a pilot program last year to evaluate mechanical-only ventilation, which could eliminate the need to replace windows on older office buildings with new, operable ones.

That means big savings for developers, said Wes LeBlanc, principal and analytics director at Gensler’s Chicago office. Developers can save anywhere from 10% to 15% on total development costs by not replacing windows.

“It’s a pretty significant savings,” LeBlanc said.

Chicago is also among the cities facing three main real estate problems, according to Horowitz. They include a housing shortage driving up rents, record rates of homelessness and increasing office vacancies.

The median rent in Chicago is $1,663, the study found. And for every 10,000 people, 71 are unhoused.

Because Chicago’s rent is high and the bulk of the city’s renters are single-person households, the microapartment model could help fill a gap in the market, Horowitz said.

Monthly rent in a co-living building would be $950 for a standard single room, according to the study. Conversions could also include double units.

“The mechanism by which this would reduce homelessness is adding another rung on the housing ladder,” Horowitz said. “By adding housing, it increases affordability across the board. In particular, this is a lower rung on the ladder and that means fewer people will end up out of a home in the first place.”

As construction costs remain high and are likely to push up further due to tariffs, the co-living model is a cheaper way to convert office buildings, the study found.

The costs per square foot to convert office buildings into co-living space is about 25% to 35% lower than the traditional office-to-residential conversion, LeBlanc said. It can be much quicker as microapartment conversions can take an estimated 12-18 months to complete, he said.

The co-living apartments could also be built for less than $200,000 each, according to the study.

Gensler and Pew identified about 30 buildings in Chicago that are ripe for conversion into co-living housing. The study did not name individual buildings but said the majority of the properties were built before 1930 with an average vacancy rate of 44%.

Brian Vitale, principal and managing director at Gensler, said co-living conversions could be a more cost-effective way to gain residents downtown, where they can enjoy amenities and have closer access to jobs in the area. .

“This makes the Central Business District relevant,” he said. “Relevancy is really important because we know the office market is not going to be what it was pre-COVID. So, we’ve got two options: We’re flexible and we look for new solutions to make the city relevant, or it just becomes a museum and nobody uses it.”