Well...
It's not a bad idea, but with some logistic problems. Plumbing for bathrooms, for one. Or use the existing ones as community bathrooms? But they typically don't have showers in those buildings. Heating and cooling would be another issue for individual units.
How do the renovation costs balance against future rents?
Fire codes? Zoning issues? Sure, it's possible to solve these and many other issues. My brother lived in a condo that used to be a warehouse. And it was really nice. And expensive.
It all comes down to the economics.