The trend of converting vacant office buildings in Downtown Los Angeles into residential housing is on the rise. This shift is seen as a win-win solution for real estate developers looking to fill empty properties through remodeling and for authorities striving to address a severe housing shortage.

According to the Los Angeles Times on the 23rd, Jamison Properties, the largest Korean-American real estate development firm, submitted an application to the City of Los Angeles in 2023 to convert the "LA Care Tower," located at 1055 W. 7th St., into residential apartments. Approval from city authorities is expected soon, with construction slated to begin this year.

Jamison plans to transform the 33-story, 600,000-square-foot office building, built in 1987, into 686 apartment units. The apartments will include studio, one-bedroom, two-bedroom, and three-bedroom units, ranging in size from 538 square feet to 1,304 square feet. The project will also feature 48,000 square feet of amenities, including a theater, gym, lounge, and business center.

Jamison Properties CEO Jaime Lee stated, ��The approval process is nearing completion. The ability to convert office buildings into residential units without major structural changes represents a game-changer for developers.�� Jamison also noted that the building's current office tenants can continue their operations on other floors during the remodeling process.

The LA Times highlighted that while many pre-World War II office buildings in Downtown LA have already been converted into housing or hotels, high-rise buildings constructed in the late 1980s and early 1990s remain largely office spaces. If Jamison successfully converts the LA Care Tower, it could set a precedent for repurposing prominent office buildings.

Jamison is also planning to convert the 10-story World Trade Center building on Figueroa and 3rd Street, built in 1975, into residential housing.

The primary reason for these conversions is the spike in office building vacancy rates, which have soared due to the rise of remote work following the COVID-19 pandemic. Office property values have plummeted as a result. According to a recent CBRE study, while approximately 80% of U.S. companies have implemented return-to-office policies, only 17% are enforcing them actively. Many managers are hesitant to restrict flexible work arrangements that employees have grown accustomed to.

The office vacancy rate in Downtown LA currently stands at 32.8%.

California's housing shortage further underscores the importance of these conversions. CBRE estimates that between 2016 and April 2024, office-to-housing conversion projects added over 22,000 apartment units. Another 169 planned or ongoing projects are expected to produce 31,000 more units in the coming years. However, this represents less than 0.5% of the total U.S. apartment inventory.

The Wall Street Journal previously reported that California faced a shortage of 3.5 million housing units as of August last year, with fewer than 100,000 new homes being built annually.

Authorities have recently stepped up to support office-to-housing conversions. In 2022, California approved a total of $400 million in projects aimed at converting offices into residences. CEO Jaime Lee emphasized, ��We are facing unprecedented demand for housing. Significant efforts are needed to build all types of housing at various rent levels.��



<Hongyong Park>