Hospitals: New Hotspots for Housing Conversions

As office-to-residential conversions stall, US cities are repurposing shuttered hospitals, capitalizing on prime locations, adaptable layouts, and federal tax incentives, according to WSJ.

Whatever Works

Towns across the US are repurposing old medical campuses into housing, capitalizing on their prime real estate, spacious designs, and existing infrastructure.

In Lakeview, MI, the closure of the century-old Kelsey Hospital left behind a 2-acre site in the heart of downtown. Facing a housing shortage, the village is working with developers to transform the property into middle-market condos and townhomes, ideal for teachers and young professionals.

Prime Locations, Easy Conversions

Unlike sprawling office towers, hospitals often feature tall ceilings, wide hallways, and ample natural light—attributes that simplify residential retrofitting. According to Christopher Korsh of Gensler, patient rooms already have standalone bathrooms, and plumbing typically runs along building peripheries, reducing conversion costs.

The trend is gaining federal support. According to the National Trust for Historic Preservation, in 2023 alone, $225M worth of hospital conversion projects qualified for the 20% federal historic tax credit.

Big Projects in Motion

The movement isn’t limited to small towns. In Queens, NY, officials are planning a 2,000-unit redevelopment of the Creedmoor Psychiatric Center campus. In San Francisco, Prado Group is converting the former California Pacific Medical Center campus into hundreds of apartments, including senior housing.

Successful conversions often command premium rents. At the historic St. Luke’s Hospital in Manhattan, apartments rent for $1,500 above the neighborhood median, buoyed by a $161M tax-credit-supported redevelopment.

While these projects alone won’t bridge the nation’s multi-million-unit housing gap, they’re proving to be a practical solution for revitalizing communities hit by economic downturns and rural hospital closures.