Early findings from the Building Opportunities on Main Streets Tracker reveal that Main Streets have the potential to add approximately 200,000 new housing units. This presents a major opportunity to address the national housing crisis — but how can communities turn this potential into reality?

Across the country, many leaders are grappling with vacant upper-story properties that negatively impact local economies. At the same time, we’re facing a historic housing affordability crisis. We urgently need more housing, and we already have underutilized spaces — particularly upper stories in downtown buildings — that could be transformed into vibrant, affordable apartments and second-story housing.

So why aren’t we converting these spaces into viable housing downtown?

Understanding Barriers to Second Story Housing

There are significant barriers to revitalizing upper-story housing. In many communities, outdated zoning codes prohibit the very type of mixed-use development that once defined our thriving downtowns — a small mom-and-pop business on the ground floor and apartments or second-story housing above. This traditional model offers an ideal solution for downtown living: walkable, compact, and community-centered. Upstairs vacancy is really hurting downtowns. 

Even where zoning isn’t an issue, developers and property owners face complex financing challenges, strict building codes, and the often-costly process of restoring historic buildings. These roadblocks can make it hard to act on the opportunity upstairs, even though it’s precisely what our housing ecosystem needs.

Despite the challenges, some forward-thinking communities are leading the way. They’re successfully converting vacant upper stories into affordable housing downtown, boosting economic activity, and offering more apartments for people who want to live close to where they work and shop. Here are six lessons from five communities that are finding success.

Data and Financing in Macon, Georgia

The NewTown Macon team in Macon, Georgia, has figured out an innovative solution to secure financing for downtown housing. NewTown Macon has a long legacy of Black entrepreneurship, and it was important to the Main Street leaders to support local and first-time developers from within the community, for whom traditional financing can be the trickiest. Here are some of their key lessons:

• Assess the market for second-story housing: NewTown Macon ran a robust market study to determine demand for second-story housing in their district. They found that Main Street could support 670 new residential housing units in the next five years, or 134 annually. Being able to point to these concrete numbers and do the banks’ homework for them made getting a loan just a little bit easier.
• Consider cultivating support with financing: NewTown Macon stepped in to help developers by moving into a lending role to bridge the gap left by traditional banks. They also help developers identify county loans, bridge loans, construction financing, and historic tax credits. This makes it easier for first-time developers to tackle projects.

Adaptive Reuse in Washington, Missouri

Adaptive reuse can present many challenges for developers. The high costs of historic restoration can make it hard for housing to stay affordable. In Washington, Missouri, the Main Street used a DIY approach to reduce the steep cost of historic building renovation. Downtown Washington, Inc., leveraged sweat equity to rehabilitate multiple historic buildings downtown and develop much-needed affordable second-story housing. 

Through this process, they learned the importance of getting early wins and serving as an example for others. One of their recent projects had a series of small opportunities and successes that drove momentum.

• The team at Downtown Washington, Inc., knew they had the experience and expertise to do some initial demolition work with volunteer labor, helping them jumpstart the process.
• Then, they sought bids from contractors for the renovation. Working with local professionals allowed them to build a case study that they could share with local property owners to encourage them to tackle their own projects.
• Once they showed it could be done, Downtown Washington, Inc., helped spur second-floor development in several more of the downtown buildings. 

Government and Partnerships in Klamath Falls and Pendleton, Oregon

In Oregon, the statewide Coordinating Program has been pushing its Main Street programs to consider second-story development downtown. They recently released a comprehensive report on what’s worked in upstairs development that includes some key strategies.

• Work with the city to lighten the regulatory load for upstairs activations: Klamath Falls had many zoning barriers, so city officials recently reworked their downtown plan, to include recommendations for updating the zoning and mixed-use standards and providing building code leniency for second-floor rehab projects. These regulatory changes aren’t official yet, but the city is loud and clear about finding ways to give upper-story housing a boost.
• Become a one-stop shop to help property owners maximize activation of vacant space: Pendleton, Oregon, has a Main Street-led Urban Renewal Association that serves as a technical assistance resource for building owners to help encourage upper-story housing development. They offer help with design, pro-forma creation, budgeting, and bid review, and they do the hard work of cultivating relationships with longtime building owners to try to remove barriers that are holding back the downtown. 

Working Across the State in Kansas

For those of you who are working in designated districts with a state Coordinating Program, it is important to work with them to understand and create statewide incentives that encourage upper-floor housing. Here is how Kansas has developed its program.

• Kansas’s Main Street program, housed in the Department of Commerce, has a grant program called Residential Opportunities on Main Street (ROOMS), which supports the conversion of existing downtown buildings to residential units with $50,000 grants to catalyze the project. 
• Through two rounds of ROOMS grants, the Kansas Department of Commerce has provided 13 grants to 11 Main Street communities, leveraged $16.7M in private reinvestment, and supported the creation of 63 upper-floor housing units.
• A third round of ROOMS grant funding opened in early October 2025.

Kickstart Housing in Your Community

Main Street America offers many resources to help communities identify opportunities, navigate challenges, and support the creation of affordable, upper-floor housing in their downtowns. 

• The Building Opportunities on Main Streets Tracker is a digital, mobile-friendly property inventory tool that helps you identify and manage building ownership, vacancy, and opportunity in your downtown. 
• The Housing Guidebook for Local Leaders provides detailed guidance on zoning, regulations, downtown vacancies, real estate funding, and more to help local leaders improve housing access and affordability in their communities.

Want to receive the latest news, resources, and tools about affordable housing and second-story development for your downtown? Make sure to subscribe to our newsletter!