A lot of Class B and C office owners are facing a hard reality right now. Vacancies are up, more than $800 billion in commercial debt is maturing this year, and waiting for the office market to turn around is not a plan anymore. Converting to residential is a path more owners are taking seriously, but not every building works and the financing has to make sense from the start.
Before you go too far down this road, there are three things worth checking.
First, does the building actually work for apartments? Residential units need natural light, so the layout matters. If the space runs too deep from the windows to the center of the building, the interior rooms end up dark and unusable. Plumbing is another issue. Offices share bathrooms down the hall, but apartments need a kitchen and bath in every unit. Older buildings can make that kind of plumbing work very expensive. Even uneven floors become a problem once you replace commercial carpet with the finishes tenants expect in a residential unit.
Second, can you afford to do it? These projects are running $300 to $500 per square foot right now. Some buildings qualify for low-interest government loans if the property sits near public transit, which covers a lot of downtown office towers. Some cities are also offering property tax breaks running 10 to 20 years to encourage exactly these kinds of projects. Knowing what help is available before you start can change whether the numbers work.
Third, come in with a real plan. Lenders are not writing checks based on a vision. They want to see that the building can physically support the conversion, that you have experience managing a project like this, and that you have enough cash for the down payment and reserves to see it through. Borrowers who show up prepared are getting answers faster and better terms.
This is where I can help. I work with borrowers across the country to find lenders who understand these projects and will finance them when the plan is solid and the borrower is ready. If you own an office building and are thinking about converting it, refinancing, or have a loan coming due, call me and let’s talk through what is possible.
Give us a call today to discuss your commercial finance needs or get started by filling out this form!
Karen Schimpf
Commercial Loan Advisor
512-358-1511
karen@applycommercialloans.com
www.ApplyCommercialLoans.com
P.S. One more thing worth knowing if you are looking at SBA financing. As of March 1, 2026, every single owner of a business must be a U.S. citizen to qualify. Green card holders, visa holders, and DACA recipients no longer qualify, and even a one percent ownership stake held by a non-citizen disqualifies the entire business. This change is affecting a significant number of deals that were already in process. If this applies to your situation, call me before you go further.