A new report by The Pew Charitable Trusts and global architecture, planning, and design firm Gensler shows Phoenix could turn empty offices into housing and help the city address two major challenges: a surplus of vacant offices and a shortage of housing. The report outlines how co-living, dorm-style microunits can be designed and financed to provide lower-cost homes for people earning well below the area median income.

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Median rents in metro Phoenix have risen 33% over the past seven years, reaching $1,385 per month in August 2025. At the same time, the city faces a 23% office vacancy rate. Recent policy changes, including relaxed density rules, a state law on adaptive reuse, and city programs such as the Adaptive Reuse Program and the 2025 Housing Solutions Plan, give Phoenix a clear path to pursue office-to-residential conversions.

As policymakers consider measures to stem the housing shortage and rising costs, this report shows how converting existing vacant office buildings can create large amounts of low-cost housing while revitalizing empty downtowns.

Building co-living apartments in Phoenix would:

  • Cut development costs nearly in half: Converting offices into co-living apartments would cost about $169,000 per apartment, compared with $300,000 for a typical studio apartment.
  • Improve affordability: Rents, including utilities, would fall around $850 a month, making these homes accessible to students, service workers, recent graduates, and others earning roughly 43% of the area’s median income.
  • Stretch public dollars: A $25 million subsidy would create 294 apartments, 2.5 times more homes than traditional subsidized studios, with no ongoing funding needed.
  • Take advantage of office vacancies: With 23% of downtown offices empty and new zoning rules in place, these conversions could provide much needed housing while addressing the glut of unused office space in Phoenix.

The research has identified a different solution to the housing crisis: Converting offices into dormitory-style “co-living”—small, private micro-apartments with shared kitchens, bathrooms, and living rooms. Office-to-co-living conversions could help address Phoenix’s housing shortage while revitalizing the city’s downtown core.

Development costs and the resulting rents would be well below comparable figures for traditional studio apartments. The Pew/Gensler research found that each co-living unit would cost approximately $169,300 to develop in Phoenix, significantly less than the roughly $300,000 needed to build a studio apartment. With projected rents of $850 per month, these furnished micro-apartments would be affordable to residents earning around 43% of the area’s median income. And all utilities—including electricity for air conditioning—would be included in rent. This type of housing would provide a much-needed option for students, service workers, recent college graduates, and others priced out of Phoenix’s increasingly expensive housing market.

Read the full report from Gensler HERE and Pew’s analysis HERE.