LA Aims for 43K Homes With Office-to-Resi Incentives

Up to 43,000 new homes lay in wait across Los Angeles, if the city can find a way to convert more of its aging commercial building stock to apartments, according to city housing officials.

City Councilmembers will vote this month on a sweeping zoning initiative that aims to do just that by expanding and updating the city’s decades-old adaptive reuse program, and hopefully helping L.A. keep pace with a historic wave of office-to-residential conversions across the country since the 2020 pandemic.

The initiative is the last of four zoning ordinances that have been winding their way through public review since 2023, and must be adopted by Feb. 12 to comply with state law and stay on track with the city’s goal of spurring development of 255,433 units by 2029.

If enacted, the ordinance will hasten permitting and provide just enough of a density bonus to entice lenders to back conversion projects in every part of the city, planning officials hope. It also means four years of research, public review and feedback from developers will be put to the test.

Arc Capital Partners’ Neville Rhone, Jr. is jazzed about what he sees as a “step in the right direction” for Los Angeles, he told The Real Deal.

Arc launched a joint venture last fall with the city’s most prolific office-to-resi developer — Jamison — to convert 3325 Wilshire Boulevard to 236 units in Koreatown, one of several neighborhoods where the city already incentivizes adaptive reuse.

Jamison has made ample use of the existing program, with 10 office-to-residential conversions under its belt, mostly within its Koreatown portfolio.

There’s a huge opportunity for the city to build on its success in Koreatown, according to Rhone. “Especially now, in the aftermath of the fires,” he added.

“Time is money,” Rhone said. “The proposed adaptive reuse ordinance can shave years off a bureaucratic process. That has long restricted housing supply in Los Angeles.”

In fact, Downtown Los Angeles boosters successfully championed adaptive reuse long before it was de rigeur in urban planning. The city’s 1999 Adaptive Reuse Ordinance ushered a wave of new housing in the heart of the city, growing the neighborhood’s housing stock from 11,626 at the time it was enacted to 56,315 units today, according to a report by the DTLA Alliance.

But that might not have been possible without the fighting spirit of civic leader Carol Schatz, who made adaptive reuse the centerpiece of her efforts to revitalize Downtown in her 20 years as the president of the DTLA Alliance, formerly known as the Downtown Center Business Improvement District, before retiring in 2018.

“Nobody was looking at Downtown as a residential market at that time,” Schatz told TRD. “We saw that as soon as the older buildings began to be converted and people were purchasing them, it drew the attention of developers from other cities.”

A turning point was when grocery chain Ralph’s opened one of its high-end locations, Ralph’s Fresh Fare, across 50,000 square feet at 645 West 9th Street in 2007.

“We surveyed the residents that were moving in and it was very clear that we had an affluent population, well-educated,” Schatz said. “There were certain things they needed — grocery stories, drug stores, bars. So Ralph’s looked at our numbers. I remember the opening day.”

The city later expanded its adaptive reuse program to include parts of Koreatown and Hollywood.

“We were very successful at bringing those neighborhoods back,” Schatz said, “until the pandemic.”

That’s when the city’s planning department took another look at the concept.

The latest expansion of adaptive reuse aims to breathe new life into the city’s office market while also tackling its housing goals, according to the planning department’s report on the draft ordinance submitted to the City Council last fall.

The Council tentatively approved the ordinance Dec. 10, pending several revisions, which the City Attorney is now reviewing. The City Attorney must return a final draft to the Council by Feb. 12 for a final vote to take place, according to a City Planning spokesperson.

As of Tuesday morning, the Council had not yet received a final draft of the ordinance, according to the City Clerk. A spokesperson for City Planning said Monday the ordinance was now “a high priority,” with the deadline looming to stay in compliance with state housing regulations.