A spike in discounted sales of office buildings and a historically sluggish market for new leases is making office-to-residential conversions an increasingly viable strategy in the country's largest metropolitan areas, according to a new report by Commercial Edge.

The real estate firm found that the number of office buildings fit for conversion to residential space might have expanded at a faster clip than investors previously anticipated, given the waning demand for new and existing office space over the last several years. The report also found that as much as 15% of the total supply of office space in the country could be ripe for conversion with enough support from financial institutions and local governments.

Commercial Edge warned that the percentage of office space fit for conversion could be as high as 40% in cities like New York and San Francisco. A sluggish growth in office employment over the last year, particularly in Central Business Districts, could also push more landlords to consider residential conversions in the coming years.