Solving the housing shortage often calls for big thinking and bold ideas. In today’s commercial real estate landscape, we’re no strangers to converting everything from offices to hotels—even baseball stadiums—into places people can call home. Now, a new frontier has emerged: redeveloping unused prisons into multifamily and mixed-use communities.

A Shift in Correctional Facilities

Between 1970 and 2000, over 1,000 new prisons popped up across the United States. But since 2010, that trend has reversed. Nearly 200 state and federal correctional facilities have closed as sentencing reforms and drug decriminalization reshape the system. Rather than leaving these sprawling sites to deteriorate, investors and municipalities are stepping in to transform them into residential hubs.

Former Prison Turned Neighborhood: A Virginia Success Story

Source: Apartments.com

The Liberty Crest Apartments in Fairfax County, Virginia—once the Lorton Reformatory—illustrates how a shuttered prison can be repurposed into a thriving residential community. Built in 1910 and closed in 2001, Fairfax County purchased the 2,400-acre site and converted the old cellblocks into 165 apartments (98% leased), 157 townhomes, and 24 single-family homes. Additional new construction introduced a swimming pool, 24-hour gym, and a yoga room.

What’s especially noteworthy is the county’s commitment to honoring the site’s past. They maintained original prison signage and opened the Lucy Burns Museum, which documents the area’s unique history. Even the bricks made by former inmates have been preserved. While luxury units are available, a portion of the property emphasizes affordability, with two-bedroom apartments renting in line with local averages.

New Projects on the Horizon

Liberty Crest isn’t an isolated phenomenon:

– Manhattan’s Lincoln Correctional Facility is undergoing a conversion into an affordable housing development.
– In New York’s Hudson Valley, the Downstate Correctional Facility is slated for a large mixed-use project.
– Utah’s massive 600-acre State Prison site will evolve into “The Point,” a densely packed community featuring thousands of new homes, an innovation district, and rail access.

The Roadblocks

Despite the momentum, prison redevelopments aren’t always easy. Many facilities sit in remote areas lacking strong local economies, making it tough to attract investors or tenants. Construction itself can be complex—thick walls and specialized layouts require substantial (and expensive) renovations. Red tape can also be lengthy, as state governments and community leaders must be convinced it’s a worthwhile endeavor.

Why This Matters

For some towns, converting a prison is a golden opportunity to re-energize neighborhoods, attract new businesses, and offer much-needed housing. In places like Michigan City, Indiana—where a prison closure looms—redevelopment could be a catalyst for reversing population decline and driving future growth.

Ultimately, these once-fortified institutions show that no property is off-limits when there’s a vision, a team capable of seeing it through, and the backing of a supportive community. The housing shortage may be daunting, but with enough creativity and collaboration, even the most unlikely buildings can become part of the solution.

👉 Schedule a call with our team today to discuss your 2025 investment strategy.