Why the Hottest Apartment Projects Are Happening in... Small Towns?

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Why the Hottest Apartment Projects Are Happening in... Small Towns?

Big cities are doing the converting. But small towns? They're doing it profitably.

The Big Shift You Didn’t See Coming

Everyone’s buzzing about cities like NYC and LA flipping empty office towers into apartments.
But here’s what’s flying under the radar:

🏢 Small-town office buildings are being converted for a fraction of the cost
📊 Vacancy rates are higher and rents are catching up
💰 Investors are getting double-digit ROI in places you’ve probably never been to

Why It Works in Small Markets

1️⃣ Lower Acquisition Costs

• $300/sqft office in L.A.

• $60/sqft office in rural Illinois

You do the math.

2️⃣ Zoning is Looser

• Many small towns are begging developers to repurpose empty buildings

• Less red tape = faster buildouts = faster returns

3️⃣ Remote Work Migration

• People are moving to smaller towns for space and affordability

• That means rising rental demand in places that once had zero buzz

Who’s Doing It Right Now?

📍 In Wichita, KS, a vacant newspaper HQ is now 40 micro-apartments with a 98% occupancy rate
📍 In Lancaster, PA, an old AT&T building is now 80 rental units—fully leased before opening
📍 In Bozeman, MT, tech workers fleeing the coasts are snapping up converted units like it’s Miami

The ROI Is Real

🧮 Average conversion ROI: 12–16% in small markets
💸 Higher rental yield due to low capex and strong demand
🏦 And yes—some banks are offering special financing for community revitalization

What’s the Catch?

❌ Local politics – Not every town board is on board
❌ Construction crews are limited – Can delay timelines in rural areas
❌ Exit options are fewer – Fewer buyers = you’re holding longer

But for smart developers with a vision?
This is the new frontier.

The Bottom Line: Big Gains in Small Places

While everyone’s chasing skyline conversions in major metros,
the real money might be in that abandoned two-story office building on Main Street.

Because when the numbers work,
it doesn’t matter if the town has 200,000 or 20,000 people.

You just need tenants—and a plan.