Over 5,800 apartments are projected to be developed through adaptive reuse in Los Angeles, with 1,700 of these from repurposed office spaces.
Our latest Adaptive Reuse Report highlights notable shifts nationwide: In 2023, hotel-to-apartment conversions led the way for the first time. Office conversions, however, showed mixed results amid uncertainties about the future of office spaces. Overall, adaptive reuse projects surged by 17.6% compared to the previous year.
According to real estate analyst Veronica Grecu, while there is strong interest in adaptive reuse to generate more housing in Los Angeles, but the financial aspect remains a key hurdle in 2024.
“High construction costs, interest rates, and real estate transfer taxes are making many projects financially unfeasible without additional incentives,” said Grecu.
“In addition to that, strict building codes, zoning restrictions, and lengthy approval processes are slowing down these adaptive reuse efforts. The current building code limits the potential for such projects, and although the American Institute of Architects California has proposed amendments to streamline the process, these changes won’t take effect until July 2024.”
Grecu also explained another factor slowing the pace of adaptive reuse projects is that many of the simpler hotel-to-apartment conversions have already been completed in recent years, particularly in downtown Los Angeles. The projects that remain are often more complex office conversions, which require more time to complete.
“With remote and hybrid work models still around, there’s uncertainty about the long-term need for office space. This raises questions about how many office buildings will ultimately be suitable for conversion to apartments,” said Grecu.
To read the full report visit https://www.rentcafe.com/blog/rental-market/market-snapshots/adaptive-reuse-apartments/