In the middle of a housing tightening, empty offices in downtown Los Angeles

The shimmering office towers of the horizon of downtown Los Angeles hide a hard truth – a large part of the space is empty.

In the years following the start of the COVID-19 pandemic, by upsetting the work standards and an evaporated request from office spaces, the owners of the city center have watched the frustration of the value of their office buildings. More than a few have faced a foreclosure, leaving the owners concerned with the need to bring the tenants back to their buildings or to find another use for millions of unused square feet.

An increase in office lease signatures has led some to hope that the office rental market has hit the bottom, but others, like the owner and developer Garrett Lee, believe that there is a more reliable path than trying to convince the tenants to return: convert the offices to apartments.

The idea took a new urgency this month as Forest fires have destroyed thousands of houses In the Pacific Palisades district of Los Angeles and Altadena, a community in the buttresses just north of the city, exacerbating the long -standing housing shortage in the region. The city center is zoned for part of the densest residential development in the County of Los Angeles.

“We have an unprecedented need for housing right now,” said Lee. “There must be an even greater than before to build accommodation for all types of units and rent levels.”

Lee is president of Jamism Properties, a prolific converter of intermediate size, older office buildings in apartments. Now, Jamison is about to plow a fresh floor by turning into a brilliant 32-story office tower built at the border of the city center in 1987.

Efforts to create a second act for the underwound office towers which were at the age of the prestige there is a generation are part of a wider drama playing in a financial center which has lost a large part of its brilliant in the years which followed the start of the pandemic. Restaurants and stores have fought with the departure of many workers while homelessness and the feeling that sidewalks are not safe have increased and helped drive from certain office tenants.

“The city center is torn between believers in the city center and the non-believers who say that he went downhill and does not come back,” said Lee. “We see a very large separation between the two.”

Although many downtown office buildings built before the Second World War were converted into residences or hotels, catchy skyscrapers built in the late 1980s and early 1990s remained mostly offices. A successful renovation of the Care Tower of Jamison at 1055 W. 7th St. could give an example to reuse prominent office towers that have been constructed relatively recently and designed to host companies for the decades to come.

The city is about to adopt a new building code which will allow developers to more easily obtain approvals to convert offices built after 1975. A previous code for conversions focused on built -up buildings before this year, when construction standards were less strict, led to a boom according to, in apartment, condos and hotel conversions from the early 2000s.

Jamism is about to guarantee the approval of the city to convert 1055 W. 7th St. “With very little structural renovation,” said Lee, which will reduce the construction costs of around 10% and save a lot of time compared to previous conversions of the company of office buildings in the middle of the century, which required significant improvements to meet the seismic codes of the city.

The possibility of converting certain office buildings for residential use without going through a complete structural modernization is also a changing game for developers in another way, said Lee. They can leave office tenants in place while converting empty floors into apartments, instead of having to empty the whole building for renovation.

“You can jump a floor or get around them,” he said about office tenants. “This really opens up things to convert buildings of 30 years” like those who dominate the roofs of the city center.

Lee plans to start working this year on 1055 W. 7th St., which will be converted into 686 apartments. New office towers like this are more attractive “nocturnal” to convert into housing than buildings in the middle of the 50s and 60s, he said, and should order higher rents.

“The bones are so much better,” he said, with windows from floor to ceiling and panoramic views. A large part of the mechanical, electric and plumbing system can be reused “because it is always very adequate to today's standard”.

Floo per floor, however, the buildings get a complete youthful cure.

“We are fully prohibiting interiors,” said Lee, withdrawing the walls, lighting and plumbing that served as office occupants. When the floors are stripped of concrete, the developers are ready to rebuild them as a relay.

There is room at 1055 W. 7th St. to create equipment such as a gym and a co-work space so that the tenants have a place to do their work outside their apartments. Other attractions of tenants will probably include a theater, a golf simulator, a karaoke room and a card room – the Jamison amenities have added Koreatown conversions.

Jamison has temporary plans to convert another office building in the city center into housing, the World World Trade Center of 10 floors in Figueroa and Third Streets, which dates from 1975. It is not clear how many other office buildings are good candidates for residential conversion, but there is a lot of space that takes place – CBRE SERVICE SHEETING SUPPORT that the central district is higher than the third of 32.4 million square feet in 70 buildings in the city center of Down Town is available. It is more than the triple of the amount considered as a healthy balance between the tenant and the interests of the owners. When the “Shadow” office space which is rented but not occupied is taken into account, the overall availability is almost 37%.

Downtown apartments market remained resilient out of the pandemic emergency Even if the offices market stumbled. The district has approximately 90,000 inhabitants, a slightly higher population than Santa Monica or Santa Barbara, said Jessica Lall, head of the CBRE city center office. They live in 47,000 residential units, most of which are apartments rented at the market rate.

The addition of more residents through conversions and new constructions could help restore a sense of life in the financial district.

Before the pandemic, the sidewalks of the city center were often crowded with office employees who go out to eat, shopping or taking meetings in other buildings. There were homeless, but a sense of order prevailed over the occupied blocks where thousands of people were employed by law firms, financial institutions and other white cervix companies.

The sense of order has not returned, said the investor of the Office John Sischo, who has worked in the city center since the 1980s.

The drop in pedestrian traffic caused by workers staying at home during the pandemic emergency and the continuation to work remotely was a drain on dynamism and the feeling of security in the financial district, which depressed offices and hindered the return of the neighborhood, said Sischo.

A 32 -storey office building in West 7th Street block 1000 will be converted to 686 apartments.

(William Liang / For Times)

“The homeless is out of control,” he said. “People do not feel safe by coming to the city center and you have lost all the momentum concerning the desire to live here.”

The changing nature of the city center is one of the reasons why Wedbush Securities is moving to avenue Lake de Pasadena, “which recovered from the pandemic,” said President Gary Wedbush.

Wedbush announced in October That he will leave behind Wedbush Center, an office building overlooking the 110 highway, for small offices in Pasadena intended to accommodate employees who now work remotely most of the time.

The withdrawal of the rental also contributed to chasing the values ​​of the office building and the leading skyscrapers to significant discounts. Among them was the tower of the 55 -story gas company, which was Sold last year At the County of Los Angeles for $ 200 million, much less than its valued value of $ 632 million in 2020.

Making the residences of office buildings in difficulty is considered environmental and can be much cheaper than building new apartments or condos from scratch, but most owners hope that the office rental market overflows and could start to recover this year.

The leases were signed for more than 600,000 square feet of office space in the fourth quarter which ended on December 21, an increase of 21.7% compared to the previous quarter. More than half of this involved renewals of existing leases, some companies expanding their offices while others have contracted.

These earnings are just a small step forward for a city center which has been overwhelmed by an excess of offices from the boom in construction in the 1980s and the early 90s.

A 32 -storey office building in South Olive Street's 1100 block, where the organizer of the Olympic Games La28 rented 160,000 square feet.

(William Liang / For Times)

The largest office lease in Los Angeles in the fourth quarter was from 28, the private group organizing and paying the summer Olympic Games and the 2028 Paralympic Games in Los Angeles. CBRE said that La28 had rented 160,000 square feet in the USC tower, a height on Olive Street a few pies of the Los Angeles Convention Center, Crypto.com Arena and the Live. La28 is expected to move to the city center later this year of Westwood.

Other new leases in the city center are in preparation, said CBRE Zanetos CBRE BRUTER. Rental trends up in other cities are promising for Los Angeles, he added.

“What we live in downtown the East similar to what is happening in Seattle, in San Francisco and in other cities, which tend to recover from Los Angeles in historical real estate cycles,” said Zanetos. “We have seen their urban nuclei start to bounce back in the third or fourth quarters and we think it augurs well for Los Angeles.”