In the heart of downtown Chicago, gleaming high-rises sit half-empty while tens of thousands of people struggle to find affordable housing. It doesn’t have to be this way.

A new report by The Pew Charitable Trusts and Gensler proposes an unconventional but increasingly urgent solution: Turn vacant office buildings into flexible co-living housing, where residents have private sleeping quarters but share kitchens, bathrooms, and communal areas.

Why Co-living?

Co-living offers a practical solution where traditional apartments fall short. Many vacant downtown office buildings—especially older high-rises—aren’t easily convertible into standard apartments or micro-units because of their size, layout, and infrastructure. However, they are well-suited to flexible co-living, which relies on smaller private rooms and shared amenities.

By working with the existing building conditions instead of against them, co-living projects can cut development costs by 50–75% compared to new construction, and by 25–35% compared to traditional office-to-apartment conversions. These savings are passed directly to residents.

“The co-living model has compelling attributes related to the building inventory, as well as the related economics,” says Wes LeBlanc, principal and analytics director at Gensler.

A pair of studies focus on Chicago and Washington, D.C., cities with abundant commercial real estate sitting vacant since the COVID-19 pandemic. According to the report on Chicago, roughly 10% of downtown office buildings are neither suitable for traditional apartment conversions nor likely to attract future office tenants. These buildings often feature large floorplates and deep cores with limited natural light, making conventional layouts inefficient or cost-prohibitive. Co-living, however, thrives in this kind of configuration by minimizing private unit size and maximizing shared space.

The result? A fully furnished, amenity-rich room for about half the cost of a downtown studio apartment.

Meeting an Underserved Market

The case for co-living is especially strong in Chicago. Median rents have climbed to $1,663 a month, while the city’s homeless population has tripled over the past year. Nearly half of all Chicago renters live alone, and many earn less than $40,000 annually, placing them well below what’s needed to afford even the smallest market-rate apartment.

Alex Horowitz, Pew Charitable Trusts’ project director for the housing policy initiative, was struck by just how many renters fall into this underserved category. “We’re seeing the same patterns everywhere—so many renters are struggling, with about half spending more than 30% of income on rent and about a quarter spending more than 50%,” he says. “And the large number of single-person renter households was a surprise too—49% in Chicago and 56% in D.C. Those figures really illustrate just how undersupplied these markets are when it comes to small, centrally located homes.”

By targeting individuals earning between $20,000 and $40,000 a year, co-living developments priced between $750 and $950 per month per person could offer a rare combination of affordability, convenience, and quality—especially in downtown neighborhoods with access to transit, jobs, and amenities.

Financial Feasibility with a Public-Private Model

While co-living has strong potential, it still faces financial challenges. Converting office space is expensive, and such projects likely wouldn’t yield investors much of a return without support. But targeted public subsidies and incentives could entice developers.

LeBlanc is confident the economics can work. “There are currently operators, developers, and investors in this space across the country, and the financial model targets a rate of return sufficient to entice private capital,” he says. “The model also leverages private capital, reducing subsidy requirements, and increasing the ‘bang for the buck’ for public sector investment.”

To accelerate progress, Horowitz recommends cities signal to developers that they welcome office-to-co-living conversions and are willing to direct local subsidies toward such efforts. “This model stretches subsidies much further than either new-build apartments or traditional office-to-apartment conversions,” he says. “Both cities could get more housing for less money by prioritizing office to co-living.”

Chicago’s Policy Head Start

Chicago is already well-positioned to make co-living conversions a reality. Unlike cities where regulatory hurdles such as minimum unit sizes or prohibitions on shared facilities block such efforts, Chicago has updated both its zoning and building codes to support creative reuse.

As U.S. cities face dual crises of housing affordability and commercial vacancy, the flexible co-living model offers an actionable and financially sound bridge between the two.

“To come out of this generational housing crisis, we’ll need to think differently,” says LeBlanc. “We need more product types and more price points. Right now, we’re leaving hundreds of thousands of people without realistic housing options. Co-living is one way we can start to change that.”

Read the full Chicago report.

Read the full Washington, D.C., report.