A new analysis ranked Dallas as one of the leading cities in apartment conversion projects, yet none were completed in 2023 amid the City’s permitting issues.
Rent Cafe found that Dallas had the sixth-highest number of apartment conversions in the works in the nation in 2023. Adaptive reuse projects aimed to add a whopping 2,939 units to the City’s apartment supply.
Dallas also leads other Texas cities in such projects, with adaptive reuse projects slated to add 1,845 units in Houston, 653 units in Fort Worth, 645 units in San Antonio, and 515 units in Austin, according to Rent Cafe data.
As previously covered in The Dallas Express, adaptive reuse projects aim to convert existing properties, such as office buildings, for different purposes, such as multifamily housing units.
With office space demand significantly decreasing in recent years, office buildings have been the most frequent target of such initiatives. Rent Cafe found that of the projects aiming to add over 151,000 apartment units to U.S. cities in the next couple of years, 38.5% were office-to-apartment conversions.
Other repurposed properties included hotels, which comprised 22.5% of adaptive reuse projects, and factories, which totaled 11.8%.
According to Rent Cafe data, in Dallas, office building conversions account for 2,565 of the apartment units in the pipeline; 274 will be hotel-to-apartment transformations, and 100 will be factory-to-apartment adaptations.
As covered in The Dallas Express, work will begin in June on a $116 million project to convert the Cabana Hotel into an apartment complex with 64 income-restricted and 96 market-rate units. Although the financial feasibility of such ventures has been questioned, the Dallas City Council approved up to $41 million in economic development incentives to help rehabilitate the vacant property in the Design District on Stemmons Freeway.
However, even when the costs line up favorably, adaptive reuse projects in Dallas have at least one more significant hurdle to clear: the City’s permit approval process.
A longstanding backlog within Dallas’ Development Service Department (DSD) hampered the completion of adaptive reuse apartment projects in 2023. By comparison, Manhattan added 733 apartment units to its market last year.
Under former City Manager T.C. Broadnax, permit delays and long approval times were common occurrences. DSD saw a considerable bottleneck in permit requests when it switched to an online permit system.
Improvements have been made, with permits for new single-family dwellings currently having a median processing rate of one week. However, adaptive reuse projects require special use permits, meaning the Dallas City Plan Commission must evaluate them.