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Rethinking Height: In The Age Of The Coronavirus, High-Rise Developments May Drop

Even before the coronavirus arrived and upended much of commercial real estate, some developers were questioning the need to build high-rise buildings in Los Angeles.

The cost of building a high-rise residential and office project in Los Angeles was going up. There were power constraints and the high cost of building parking was also a major issue.  

Oceanwide Plaza development in Downtown Los Angeles
The Oceanwide Plaza megaproject in Downtown LA, being built by Chinese developer Oceanwide Holdings.

Jamison Realty CEO Jaime Lee said the cost of developing a high-rise building just wasn't penciling. 

"It's not COVID alone that is the impetus behind that," Lee said during a Bisnow webinar. "But it's sort of the nail in the coffin."

For much of the decade, the construction and development of high-rise buildings were seen as a solution to meet a city's residential demand, add to a city's prestige and pack more density in an urban area.

But the arrival of the coronavirus and high construction costs have some developers shying away from building skyscrapers in favor of low- or mid-rise developments, experts said.

More than 450 people registered to watch and listen to Lee, GPI Vice Chairman Lee Wagman and Clark Construction Group Preconstruction Executive Darrell Torres discuss LA's current development landscape during a Bisnow-hosted webinar called Checking In On Major SoCal Construction: the State of Major Developments On The Westside, Along Wilshire And Beyond.

For the past several years, Los Angeles has seen a huge influx of developers building skyscrapers across the city especially downtown. The city also promoted the building of high-rise projects, especially near transit areas, as a way to add to the city's stock.

But the infection rate of the coronavirus has people rethinking working and living in a dense urban environment. With many people now working from home, there has been a growing interest to ditch the urban lifestyle in favor of suburban living.

Although a recent Johns Hopkins University study found that living in denser places is not linked to a higher infection rate, there are reports of people shying away from dense areas.

GPI Cos.' Lee Wagman, Jamison Realty's Jaime Lee, Clark Construction's Darrell Torres and Bisnow's Matt Seukunian discuss major Southern California construction projects during a Bisnow webinar
Clockwise from left: GPI Cos.' Lee Wagman, Jamison Realty's Jaime Lee, Clark Construction's Darrell Torres and Bisnow's Matt Seukunian discuss major Southern California construction projects during a Bisnow webinar.

Wagman predicts that there are going to be significant changes coming to the office market, one of which is "a gravitational pull away from high-rise office buildings."

"I think lobbies, queueing up and waiting for elevators and vertical transportation are just going to prove to be challenges for a lot of building operators over time," Wagman said.

Wagman added costs are a major issue.

Construction costs are still holding steady, Torres said.

"Subs and trades have held their prices," he said.

Wagman said he and his team have been focusing on incorporating many design elements into their office buildings, some of which are low-rise or conversions across Los Angeles. 

They've built in lots of outdoor space, have placed doors and windows that open wide onto balconies and terraces, and placed touchless systems throughout the buildings, Wagman said.

"Anything that can avoid the congestion that you're going to have in a major building's lobby is going to be high value to tenants," he said. "I suspect questions that tenants have on these COVID protections are going to be as important as LEED and other aspects of building designs."