The city expanded the adaptive reuse ordinance to parts of Hollywood, Koreatown, Chinatown, and Lincoln Heights in 2003. Its Office of Historic Resources now lists 10,000 units either completed or under development. Long Beach just adopted an adaptive reuse ordinance of its own, intended to boost its once-neglected downtown area.

Those ordinances are coming in handy now as Los Angeles grapples with enormous housing demand. The multifamily vacancy rate is at about 4 percent, according to the Casden Real Estate Economics Forecast’s 2016 Multifamily Report, issued last week by the Lusk Center for Real Estate. The average monthly rent across Los Angeles County was $1,307 a month in 2015, a 4.8 percent increase over a year earlier. That’s got developers looking at outdated office buildings and doing the math.

“If you’ve got one level of return for office, and another level of return for housing that’s getting higher as we speak, moment to moment, at some point, the lines cross,” said Bostic. “What once made sense as an office now makes sense as a multifamily.”

Even as the apartment market is hovering at near capacity, the market for office space has been limping forward. The county office vacancy rate tightened to 15.1 percent in the first quarter, according to Jones Lang LaSalle. That’s a significant dip from the prior quarter’s 15.5 percent, and a further drop from the 16.1 percent in the first quarter of last year.

Taking even a dozen buildings out of the office pool and converting them to residential use can help both markets.

While such conversions are not without their obstacles (see page 28), they can be less expensive than ground-up developments.

Conversion Converts Confess

Joe Wathen, chief executive of Koreatown-based Wilshire Construction, has tackled a half-dozen conversion projects, including 1100 Wilshire, just west of downtown Los Angeles – a 37-story office that was vacant for two decades before becoming condos in 2006.

What has been the biggest challenge in these conversions?

Layers of unknowns can force you to change your approach more frequently than with (ground-up) projects. Your drawings, schedule, and budget must then be modified to accommodate those surprises.

What has been easier than you expected?

Finding buildings that make good candidates for conversion.

What particular project are you most proud of?

1100 Wilshire was a large, complex undertaking with building systems that did not measure up to our expectations, creating constant challenges to keep moving forward. The amenity deck was re-created from the bones of what existed at the 17th level. The schedule was challenging, but the end product was a success.

Would you take on more conversions?

Absolutely. In the end, your team’s efforts breathe new life into an older building. It can be a cost-effective form of redevelopment without the neighborhood construction impacts of a new, ground-up project.

Karin Liljegren, founder of downtown L.A.-based architecture and interior design firm Omgivning, has worked on about two dozen conversion projects, including Jamison Services’ Westmore, and was recently tapped for CIM’s renovation of the Farmers Insurance building.

What has been the biggest challenge in these conversions?

Offices typically have many layers of tenant improvements from decades of companies moving in and out or renovating within. With layers of drywall and carved-up spaces, it’s difficult to see what surprises lie underneath.

What has been easier than you expected?

It’s our job to take the corporate out of the building and make it feel like home. This might seem like a challenge, but most older offices have grand lobbies, elaborate detailing, and high-quality finishes. These unique features can no longer be replicated in most new multifamily construction.

What project are you most proud of?

The Broadway Loft building had been empty for about 40 years and was in dire shape. It was a smaller and indistinguishable building among the many ornate, large, or architecturally significant buildings in downtown’s Historic Core. The owner asked us to put bridges in the old, nasty light courts and to make them entries to the units. The adaptation became a beacon of the building.

Would you take on more conversions?

There is nothing more rewarding than seeing a building in disrepair that looks like a horror movie (and many were filmed there), and then bringing new life and energy to make people proud to call it home.

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