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Drones and air taxis will overwhelm today’s air traffic system. A $200 billion “iOS for the sky” is coming, and the firms building it will capture toll-booth profits.
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Buy the Office Conversion Boom Before Q4 Earnings
Office vacancies are at record highs, but office conversions are creating a trillion-dollar building wave. Here’s how investors can profit from the retrofit boom.
By Peter Christensen
All featured assets were selected independently and objectively by the authors. Finance Play may receive compensation via ads and affiliate links.
In Chicago, developers paid $17.5 million for a distressed downtown building beside the St. Regis to convert it into a Jewish prep high school. In Des Moines, a charter operator remodeled an empty office into the city’s first downtown school. In Minnesota, a high school spent $5.6 million to turn a 66,000-square-foot office building and 16-acre site into a K-12 campus.
These examples of the conversion of urban planning disasters to discount zoning are the tip of a trillion-dollar transformation. Vacant offices are becoming raw material for housing, schools, hotels, and clinics. Smart money is already positioning for what could be the largest urban square-footage shift since post-WWII suburbanization.
Why Office Conversions Matter
Record Vacancies and Debt
National office vacancy rates hit 20.7% in Q2 2025. San Francisco tops at 34%, compared with just 8.6% before the pandemic. And a wave of nearly $1 trillion in commercial real estate loans is maturing in 2025. Delinquencies are rising, forcing distressed sales, recapitalizations, and conversions.
City Incentives Align
Cities know that every empty tower is a hole in the city’s piggy bank, so they’re offering every tool they have to spark conversions:
Tax breaks: New York’s RPTL 467-m gives major property-tax reductions for affordable-housing conversions.
Grants per unit: Boston pays developers thousands per affordable unit delivered.
Less red tape: California laws AB 2011 and SB 6 allow housing in commercial zones without rezoning.
Relaxed building rules: Cities ease parking, unit size, and code requirements.
Direct funds: States are setting aside conversion cash for hard projects.
Distress Equals Opportunity
Offices account for half of all commercial real estate (CRE) distress: $51.6 billion “in distress” and another $74.7 billion “at risk” as of Q4 2024. But conversions are accelerating. Already, 76% of projects are for housing, 8% for hotels. A record 71,000 apartments are in the pipeline this year, implying $7–$35 billion in construction activity at $100–$500 per square foot. This boom is real.
Your Finance Play on Office Conversions
Office vacancies are hitting record highs, and the CRE market is hurting, but smart money is using distressed towers as raw material for housing, schools, and clinics. Cities want it and are providing incentives that, together with $1 trillion in maturing CRE debt, are fueling conversions. This is creating a retrofit boom that could reshape U.S. skylines and bring strong investor upside. Select each ETF below to learn why they will be the winners:
Bottom Line
The office-to-anything conversion boom is the next trillion-dollar real estate cycle. ETFs like IYR, VNQ, PKB, and BIZD let investors capture value across REITs, retrofits, and private credit, turning distressed vacancies into catalysts for long-term urban redevelopment.
This website shares our opinions and commentary on markets, commodities, and other assets. We may receive financial compensation to include certain featured companies/services/etc. in this website. Such financial compensation may impact the placement, but it does not impact on our critical analysis. The opinions, analysis, and commentary contained in the website are not financial advice. Market data mentioned here may be delayed and is not real-time. Investments involve risk including the risk of loss of some, or all, of your investment, and may not be suitable for all readers. While we make a good faith effort to provide you with unbiased professional opinions, please don’t make investment decisions based solely on this content — always do your own research or talk to a qualified advisor before making any investment decisions. We’re not responsible for any actions you take based on what you read here.
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