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With aging office buildings trading at discounts because of high vacancies, developers have opportunities to invest in conversions of buildings into housing, education facilities, hotels, life science centers, and health clinics, according to a published by Gensler late last year.

The surplus of outdated office buildings and the flight of office users out of many cities has led to a boom in such projects, according to the firm. The adaptive reuse boom is poised to create valuable new real estate, Maurice Reid, office managing director in Gensler’s Portland office, stated in an email. Creative conversions could include retail to health care, retail to sports, office to senior living, and office to science labs, according to Gensler.

鈥淲hile conversions have been discussed a lot over the last year, conversations have shifted to alternative options for these transformations, especially considering the challenging policies that make such conversions more cost-prohibitive,鈥� Reid stated.

Permits issued in Portland from January 2024 through April 2025 led to completed conversions such as an office space to an ice cream shop at 3987 N. Mississippi Ave.; a vacant athletic facility to a retail store at 9312 S.E. Stark St.; a tattoo shop to a comedy club at 1510 S.E. Ninth Ave.; an open office space to a pickleball area at 2201 N.E. Lloyd Center (suite F); and an auto repair shop to a food court and bar at 16116 N.E. Halsey St.

Conversions in the works include a billiard hall to a coffee shop at 8435 S.E. Powell Blvd.; a chiropractic clinic to a restaurant at 7834 S.E. 13th Ave.; and an office to a coffee shop at 4826 N.E. 105th Ave.

Converting offices into residential spaces holds promise, Reid stated. But there is a growing concern about what to do with buildings that are not suitable for housing and will not recover as office spaces, he added.

鈥淚t’s worth exploring how former courthouses, grand bank buildings, and historic public structures 鈥� no longer serving their original purposes 鈥� could be repurposed into recreation centers, sports facilities, and community hubs, offering new ways for people to connect with and engage in their cities,鈥� Reid stated.

Old courthouses with large internal courtyards could be covered with glass roofs, creating indoor atriums that house climbing walls, racquet courts, and multipurpose recreational areas, Reid stated. Other new uses could include cafes, lounges and social gathering areas.

Gensler is seeing a significant number of office-to-residential conversions happening on the East Coast, where seismic upgrades are not required.

The Oregon Casket Building and the Falcon Building are the first two office-to-residential conversions that have been issued permits and remain on track for completion, Portland Permitting & Development spokesperson Ken Ray stated in an email.

A project team plans to convert the Oregon Casket Building, at 403 N.W. Fifth Ave. in Old Town, into a 25,000-square-foot mixed-use building with 34 residential units and retail space. The exterior scope of work would be limited to replacing windows and doors and reconstructing the storefront along Fifth Avenue. Design Research Office is the project designer. Construction is expected to start in January 2026 and finish around March 2027.

The Falcon Building, at 321 N.W. Glisan St., previously held 85,500 square feet of office space. It’s set to become 59 units of middle-income housing. In January, the project team submitted a building permit request. The permit intake was approved by Portland Permitting & Development, but fees must be paid prior to review. The project’s design is by Brett Schulz, Architect PC.

Portland City Council in March 2023 passed incentives for building conversions. One exempts developers of office-to-residential building conversions from paying system development charges (SDCs). This exemption applies to conversion of an office building to residential use when a required seismic upgrade is completed as part of the process. The city will cover up to $3 million in SDCs or the cost of the seismic upgrade, whichever is lower.

A second incentive amends the seismic design requirements for office-to-residential conversions to meet the American Society of Civil Engineers (ASCE) 41-BPOE (Basic Performance Objective for Existing Buildings) standard, which is for life safety 鈥� enabling occupants of a building to exit it safely following a major earthquake. The change could ensure feasibility for some projects.

Also, a city initiative to boost housing development is under consideration in Portland. The proposed ordinance would waive SDCs until either 5,000 housing units are built or three years pass. The proposal will go before the Revenue Committee in early June and then the聽Portland City Council.