Adaptive Reuse, Parking Requirement Changes Helpful For Multifamily Builders — But Not A Panacea
Multifamily developers and real estate owners active in Los Angeles are happy about approved rules that reduce parking requirements and can potentially increase the pool of properties eligible for adaptive reuse conversion citywide but aren't taking full advantage of them yet.
Though these rules are designed to help reduce the barriers to building housing, and the costs to renters and buyers of the completed units, hurdles remain, industry professionals said at Bisnow’s Multifamily Annual Conference West on Nov. 21.
“The secret to adaptive reuse is you have to buy the building 20 years ago,” Jamison Properties President Garrett Lee said during the event. Jamison has completed several projects, many of them in Koreatown, that have involved reusing an office building into apartments.
A Gensler study found that of North American office buildings the architecture firm assessed in a study on adaptive reuse, only about 25% were suitable for repurposing as housing. An August study from the National Bureau of Economic Research estimated that just 11% of office buildings in the U.S. were reasonable candidates for residential conversion.
EQ Office Vice President of Development Nick Browne said he believes the actual number of viable office properties for residential conversion could be 1% or lower.
“The number of headlines and press around ‘the way out of the office crisis is adaptive reuse’ is completely dislocated from the reality of what's on the ground,” Browne said.
Lee noted that LA is moving in the right direction on this front: The city is seeking to expand the pool of buildings that can be adaptively reused.
Now, only buildings from before 1974 were eligible, but with a pending update, any building more than 15 years old would be eligible, and the minimum unit size would be done away with. This would give developers more flexibility to shrink unit sizes to meet the market and help projects pencil out. But some expensive requirements still remain.
The requirements that a building be brought up to the current fire code and 75% of the current seismic code are neither cheap nor fast, Lee said. Also, some of these office properties are not entirely vacant, meaning that tenants must sometimes be accommodated.
“Upgrading a building when you have existing tenants — I think that's the most difficult part that people are going to face,” Lee said.
Aside from adaptive reuse, another topic frequently discussed now that fewer motorists are commuting to work is parking.
There are parts of the city where a minimum amount of parking is no longer required, whether because of state or local legislation. Parking is a pricey addition to housing projects, the costs of which are ultimately passed on to would-be renters and owners, increasing the cost of housing.
Plentiful parking, especially the free kind, is also frequently pointed to as a kind of self-fulfilling prophecy that entices people to continue relying on cars for all trips out of their homes and sacrifices space that could be used for people instead of cars.
Lee said that, in the “old days,” Jamison projects might have had three levels of underground parking. Now, they have maybe one level underground and one above ground, where retail may have gone before, as Jamison has shrunk its retail components since the onset of the pandemic.
No panelists had projects without parking, though AC Martin Associate Principal Kyle Martin did say the firm does do affordable projects without parking.
“I do think the future is that we'll need less parking in our buildings, but I don't think that the market’s actually caught up with that yet,” Goldrich Kest’s Director of Development Emily Taylor said.