What’s old is new again: how this international trend could ease Australia’s housing crunch
“The greenest building is the one that already exists.”
Australia’s cities are grappling with a growing mismatch between real estate supply and demand.
Residential vacancies have dropped to just 1.1 per cent nationwide as of March 2025, intensifying already critical housing shortages across Australia’s capitals. Compare this to commercial property where, despite strong demand, a steady stream of new office developments has driven CBD office vacancy rates to 13.7 per cent as of early 2025, with non-CBD areas hitting 17.2 per cent.
This imbalance – oversupplied office stock and undersupplied housing – threatens to derail both national housing goals and the financial prospects of the construction sector.
Fortunately, there’s a promising solution: adaptive reuse. This method repurposes underutilised buildings for entirely new uses and has a proven track record of revitalising urban neighbourhoods across the world.
It’s an ideal strategy to unlock the hidden real estate potential of Australia’s CBDs – Hassell estimates that 6.5 per cent of Melbourne’s office space could be radically repurposed into 10,000 to 12,000 new apartments that can house up to 20,000 people.
The benefits of adaptive reuse are there, but it’s not a silver bullet. Before policymakers and developers embrace it as the answer to the housing crisis, they must first understand the true intent behind adaptive reuse, its many considerations, and the demands it imposes during construction.
More than just surface change
It’s important to distinguish adaptive reuse from cosmetic upgrades like façade facelifts or the addition of end-of-trip facilities. Those are enhancements – not transformations.
True and effective adaptive reuse demands a major, often complete, overhaul of a building’s core functions – from its internals to its surroundings and even its foundations – to prepare it for a new purpose.
Approaching adaptive reuse starts with asking the right questions: “What else could this building become?”, and more crucially, “What must be torn down, rebuilt, or reimagined to make it fit for a new use?”
Successful projects strike a delicate balance: overhauling a building’s guts while preserving its architectural character and structural integrity. It goes beyond mere upgrades – adaptive reuse requires a fundamental rethink of how the building will serve new inhabitants and the surrounding community.
This ambitious transformation comes with challenges:
Overall costs: Adaptive reuse isn’t always cheaper. Depending on the asset class, costs can vary widely. Our research shows that converting office space into high-end Build-to-Sell (BTS) residences costs about 2 per cent more than new construction, while conversions into student accommodation can yield 12 per cent in savings.
Construction constraints: Physical limitations often complicate office-to-residential conversions – floor-to-floor height, awkwardly placed internal columns, and building core locations can hinder the construction of spacious, modern apartment layouts. In addition, stripping older buildings may reveal hidden issues like asbestos or weakened concrete that require costly remediation.
Planning policies: State regulations are also a huge consideration. Different states may have varying policies and regulations around the repurposing of older buildings or developments. For example, New South Wales and Western Australia impose strict heritage approvals for adaptive reuse projects, while parts of Queensland require compliance with flood resilience standards for certain precincts.
Faced with these hurdles, it’s fair to ask: is adaptive reuse worth the effort? The answer is still a resounding yes. Despite the complexity, adaptive reuse delivers multiple benefits in the areas of sustainability, flexibility, and public trust – making it a compelling alternative to meet Australia’s housing needs.
Carbon, circularity, and community
Carl Elefante, former president of the American Institute of Architects, famously said, “the greenest building is the one that already exists”.
Nearly 80 per cent of a building’s embodied carbon emissions are tied to the materials used during its construction, with transportation and assembly making up the rest. Adaptive reuse locks in this embodied carbon, while preventing the emissions that would come from demolition, new construction and rework.
This carbon advantage offers a major boost for adaptive reuse projects during the planning and approvals process.
Across all three tiers of Australian government – federal, state, and local – there is existing support for adaptive reuse as a contributor to the circular economy.
Projects that demonstrate reductions in embodied carbon, minimise waste emissions, and contribute to urban preservation and material circularity are likely to face fewer regulatory hurdles, encounter fewer delays, and gain stronger public and governmental backing.
Due to this combination of carbon savings and policy support, adaptive reuse strategies have seen applications beyond just office towers.
Take Sydney’s Marrickville Library, for example – a heritage-listed hospital transformed into a new place of learning. Or Greenway Views in Canberra, which gave an old suburban government office new life as a vibrant retirement community. And in Adelaide, an old Clipsal factory has been reinvented as a thriving community hub for the Bowden development.
Adaptive reuse challenges us to see the urban landscape through a long-term lens.
Rather than endlessly constructing new developments without considering future demand, it urges us to ask: “What could this asset become in 50 years?”
That kind of forward-thinking mindset is exactly what Australia needs to address its two-decades-old housing crisis and provide liveable, high-quality dwellings for generations to come.
