America’s housing shortage isn’t just about what we fail to build—it’s also about what we’re letting deteriorate. Across our cities, thousands of well-located, mid-density Class C apartment buildings—built from the 1950s through the 1980s—are quietly eroding. Leaky envelopes, outdated mechanical systems, poor ventilation, and rising operating costs plague these properties. They’re dense, walkable, near jobs and transit—but often treated as second-class assets.
For real estate developer Tyson Dirksen, that decay isn’t just a problem; it’s an opportunity—and a missing piece in the broader fight against the housing shortage.
“We spend endless hours debating new construction,” Dirksen says. “Meanwhile, some of the best-located housing in our cities is quietly becoming uninhabitable. Upgrading that stock is both a housing solution and a smart business play.”
Why Deep Retrofits Are Rare
Most value-add investors focus on cosmetic upgrades in Class B and A-minus properties: paint, countertops, minor landscaping. Simple, predictable, well-understood. But deep energy and performance-focused retrofits rarely make financial sense at that level.
Dirksen explains: “On Class B or A-minus buildings, upgrading the envelope, electrifying HVAC, or installing low-carbon materials often doesn’t pencil. The rents or sales premiums rarely justify the investment. That’s why so many projects stop at cosmetic improvements.”
Class C buildings, however, are undervalued due to deferred maintenance and poor efficiency. Deep retrofits can transform the building, reducing energy use 30–60% while extending building life by decades (Rocky Mountain Institute, NREL).
“These aren’t cosmetic tricks,” Dirksen says. “This is infrastructure-level work—making the building last, reducing carbon, and improving long-term value.”
Class C to Class A-Minus: An Investment Thesis
When executed well, deep retrofits reposition Class C buildings into Class B+ or A-minus assets—institutional-grade properties attractive to investors seeking predictable cash flow, lower operating costs, and stable returns. Cap rates compress as more institutional capital competes for these upgraded assets, creating both a financially compelling business model and a way to increase housing supply faster than starting from scratch.
“This is another arrow in our quiver,” Dirksen notes. “You can take an undervalued asset, improve performance and durability, and suddenly it becomes a property that institutional investors want—while also increasing the city’s available housing stock.”
How Retrofits Fit Into the Broader Housing Strategy
This approach directly complements the solutions outlined in the first two articles in this series. In Housing in America Is Broken — Here’s How Tyson Dirksen Thinks We Fix It, we explored how decades of underbuilding, restrictive zoning, and slow approvals have starved cities of housing. In We Don’t Need Skyscrapers — We Need Walkable, Mid-Rise Cities, we argued that four- to eight-story buildings across urban neighborhoods—and eight- to twelve-story buildings along transit corridors—could unlock massive new supply quickly and efficiently.
Deep retrofits add a third lever. Instead of demolishing aging buildings—which is time-consuming, carbon-intensive, and wasteful—retrofitting preserves existing mid-rise stock while upgrading performance. That increases housing availability without waiting for new construction and reduces environmental impact, while simultaneously creating investment-grade assets.
Location and Density Are Already Built-In
One of the biggest advantages of Class C retrofits is location. These buildings are already mid-rise, near transit and jobs, embedded in walkable neighborhoods. That density supports corner stores, cafés, clinics, and other everyday services—amenities that make neighborhoods function efficiently.
“You’re not chasing land near transit,” Dirksen says. “You’re upgrading what’s already there—where people actually live—and doing it intelligently.”
Preservation as Production
Deep retrofits are housing production disguised as preservation. They stabilize neighborhoods, reduce emissions, extend building life, and deliver institutional-quality assets. The U.S. Census Bureau and Bureau of Labor Statistics highlight how much housing stock remains underutilized or inefficiently maintained. Retrofitting these units turns potential liabilities into assets—improving the built environment while increasing housing supply.
“The housing crisis isn’t just about adding units,” Dirksen says. “It’s about making existing buildings perform better, unlocking value, and creating assets that last for decades. That’s where the smartest money, the most impact, and the best cities are going to be built.”
Why This Matters
With the U.S. short several million units (Freddie Mac), combining mid-rise infill, zoning reform, and deep retrofits gives cities multiple levers to tackle the housing shortage quickly and efficiently. Deep retrofits allow faster deployment than new construction, lower embodied carbon compared with demolition, and deliver resilient buildings that meet institutional standards.
We don’t need to tear everything down.
We need to retrofit it right, unlock hidden value, and increase housing stock—adding another powerful tool to the strategies outlined in the first two articles of this series.