The evolving future of office conversions

The District of Columbia, Maryland, and Virgina (DMV) region is emerging as a national test case for the future of office space.

As cities across the country grapple with persistent office vacancies, D.C. is taking a bold approach: Instead of focusing solely on residential conversions, it is pioneering a broader strategy to convert offices to…anything.

While the concept of office conversions isn’t new, most efforts have been centered on residential use. D.C.’s strategy breaks that mold.

In January 2025, the city launched the Central Washington Activation Projects Temporary Tax Abatement, better known as the Office to Anything program. This policy targets buildings that aren’t suitable for housing conversion and opens the door to a wider range of uses.

With this program, D.C. is positioning itself as a laboratory for alternative office conversions, from data centers to hospitality and mixed-use spaces. As federal workforce reductions continue and General Service Administration (GSA) leases expire, the DMV faces mounting vacancies. This presents a rare opportunity for other cities to watch D.C.’s approach in action and consider how similar policies could reshape their own urban cores.

WHY D.C.’S OFFICE MARKET SIGNALS A NATIONAL SHIFT

The DMV is ground zero for federal downsizing, with one-fifth of all federal workers, according to Brookings, and 46 million square feet of office space leased by the government. With our Federal Property Pulse (FPP) tool, we are tracking these GSA leases and cancellations across the U.S. Since January 2025, 24 leases in the region have been canceled, contributing to 1.9 million square feet of vacant office space. This is over 4% of the total space leased by the GSA. The FPP shows that another 9.98 million square feet of space could enter the already struggling DMV office market in the next year.

This is a critical moment for the region. As the structure of the federal government continues to evolve, so must the economic core.

Brookings’ DMV Monitor reported a mismatch in displaced federal government workers and available private sector positions. While there are new jobs entering the market, many of these are unsuited to the 17,000 displaced federal government workers, as the new roles are concentrated in construction, hospitality, and healthcare sectors.

As GSA lease expiries and cancellations increase and federal workforce reduction continues, D.C. could become a case study for the role of office conversions in supporting a shifting economic core.

FEDERAL LEASE EXPIRIES: A TICKING CLOCK FOR OFFICES

A wave of expiring federal leases is approaching. As part of the effort to cut government spending, the GSA will reduce its leased footprint by allowing expiring leases to lapse without renewal. With the GSA leasing 145 million square feet of office space across the U.S., the DMV will not be the only region affected. Of that space, 51.4 million square feet are already in holdover, soft-term, or nearing soft-term.

While we can predict an influx of former GSA-leased properties will enter the market, lease terms make it difficult to know exact timing. GSA leases typically include a noncancellable “hard-term” followed by a “soft-term,” where leases can be terminated with 120–180 days’ notice. This creates uncertainty around when properties will re-enter the market.

UNLOCK NEW USES FOR OFFICE SPACE

The initial hype around office-to-residential conversions was driven by a rise in vacant office properties in favorable downtown neighborhoods. These properties helped address housing shortages, but many of the most viable buildings have already been repurposed.

With residential conversion options narrowing, cities must assess market demand and local economic drivers to identify alternative uses. The D.C. Office to Anything policy seeks to reposition underutilized office assets into higher-performing uses based on zoning, market demand, and building characteristics. Key alternative uses include small-scale industrial, data centers, hospitality, and mixed-use spaces.

Looking beyond the office-to-residential model could offer cheaper conversions and shorter timelines. Small scale industrial and logistics conversions come in around $100-$150 per square foot with timelines of 6 to 12 months, while residential conversions cost $250-$400 per square foot with 24-to-36-month timelines. Not only do industrial uses offer lower conversion costs, but shorter timelines could also result in quick returns on investment.

It isn’t only a matter of cost and timelines; alternative office conversions are better suited to meet the needs of an individual market. For some cities, data centers are emerging as an opportunity for conversion. With a projected shortfall of over 15 gigawatts of processing power by 2030, vacant office properties located near economic and urban centers could help to curb demand. In particular, offices can be converted to edge computing facilities that distribute processing and data storage, keeping these capabilities closer to data sources.

WHAT MAKES CONVERSIONS WORK?

Successful conversions depend on two things: physical feasibility and financial viability. Local government support is key to improving the viability of conversions through streamlined approval processes, zoning flexibility, and financial support.

Zoning is one of the first, and more formidable hurdles that office conversions face. If a commercial property cannot be rezoned, the entire viability of the project falls apart. Downtowns with zoning flexibility will see the most success in the long run. In Texas, statewide zoning flexibility is enabling office conversions in cities like Dallas.

Local government can also play a major role in determining the financial viability of a conversion project. Without tax incentives or subsidies, the cost of conversions could be prohibitive. This is part of what makes D.C.’s Office to Anything conversions so appealing. Providing a 15-year temporary property tax freeze, the policy improves viability. Combined with the potential for lower conversion costs for nonresidential uses, these projects could become more appealing for developers.

SCALE THE STRATEGY

The DMV isn’t alone in facing office vacancy challenges. Across the U.S., millions of square feet in GSA properties stand to enter the market. D.C. can show us what to do with that vacant space. Office conversions don’t have to mean housing, they can mean anything. As cities continue to rethink their economic cores, the success of D.C.’s Office to Anything strategy could redefine how we use space.

Mark Rose is chair and CEO of Avison Young.

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