L.A. development experts call for streamlining of adaptive reuse processes

Reaume Richardson, Evan Richardson's general contractor, has focused on adaptive reuse for the last decade.

HatchSpaces, a lab and testing facility in East Los Angeles, was created from an underutilized metal manufacturing factory. Reaume Richardson, Pasadena's headquarters, is now located inside a former auto repair shop.

Richardson has witnessed the popularity of adaptive reuse fluctuate since co-founding Reaume Richardson with his wife in 2003. The trend has recently seen a new development. A portion of the $308-billion budget signed by Gov. Gavin Newsom allocated $400 million in incentives to encourage the conversion of commercial buildings that were underutilized into housing throughout the state last year. He distributed $150 million last fiscal year, and the remaining 250 million this fiscal.

Roberto Vazquez is the project director of Los Angeles architecture company Omgivning. He outlined the benefits and challenges of adaptive reuse as a possible development option. In a March letter, he sent to Mayor Karen Bass on behalf of AIA Los Angeles Government Outreach Committee, a professional association for architects which also serves as a government advocacy organization. The letter highlighted recommendations to advance and improve adaptive reuse in L.A.

Benefits: Creating housing by repurposing buildings in a sustainable way. Time and money are the challenges.

Vazquez said to L.A. Business First that as an industry we cannot continue to tear down our buildings, and then build new ones in their place. Climate change has a huge impact on the environment. Construction industry accounts for more greenhouse gas emissions than automobiles in the United States.

Conversions can be made more efficient by converting them in a streamlined manner

Richardson acknowledged that the California Environmental Quality Act, entitlements and traffic studies can be frustrating. He added, however, that adaptive reuse projects offer some advantages over existing buildings.

He said that if you were to tear down a building and rebuild it [from] the ground up, then the city would require you to do several studies in order to ensure you don't impact the neighbors. For example, shade studies are required to ensure you won't block someone's view. On an existing building it is already there. You are just changing the use and risk category.

Sejal sonani, managing director of Los Angeles-based HLW Architects echoed this sentiment but suggested that the city could streamline the process even further.

She said, 'You'll save time in the approval process since there is already a building on site.' If the approval process was faster, it would make it more attractive to convert an existing building rather than build a brand new one. As many investors are focused on ESG (environmental, socio-economic and governance), the carbon footprint of a converted building is much smaller.

Vazquez noted in his letter to Mayor that Los Angeles could make adaptive re-use more attractive to developers by streamlining and incentivizing projects for adaptive reuse to include affordable housing, especially since the current budget allocates $410 million to this concept.

Omgivning was consulted by the Los Angeles City Planning Commission on the DTLA 2040 Plan. Vazquez explained that the plan has a big impact on adaptive reuse because of the incentives and preapproval given to developers planning reuse projects.

He said, "That gives the building owner certainty that they won't have to submit entitlements or deal with the unknown." The program provides building owners or developers with the assurance that their projects will be approved. You do not need to submit any entitlements, or even zoning reviews. Just submit your plans to the building department. It reduces uncertainty and reduces timeline.

Construction costs

Evan Jurgensen, Senior Vice President at Lee & Associates, said that some of the developers with whom the firm works find the cost of adaptive reuse to be a barrier.

He told L.A. Business First that 'it's very costly'. It was evidently exacerbated by [supply-chain problems] during the pandemic and there was an increased demand. Prices on construction really went up. I believe they've come down a bit, but not by much.

Sonani said that policy changes could be one solution for making adaptive reuse economically viable. She also stated that state tax credits make the process of converting offices into housing more affordable. Developers may also want to benefit from tax incentives for historic preservation projects.

A report by Rand Corp. on adaptive reuse identified about 2,300 commercial properties in L.A. County that could be converted to residential units, 787 of which were office buildings. According to the Southern California Association of Governments, converting the properties would add 72,000 to 113,000 units of rental housing, which is 9% to 14% of what L.A. County will need to build in the next eight-year period.

The study estimated that adaptive reuse projects would cost 48% less to build than new construction, and 27% less when you consider the total costs of development.

Study found that hotels and motels were the best low-risk options for converting into housing. Office conversions, however, varied. Rand found that one- and two bedroom apartment types were 'financially unfeasible', while studio apartments had more potential.

Age and seismic upgrades as factors

The Rand study found that the logistical and economic feasibility of converting retail and office properties depends on the size, layout, type of construction and condition of the building. Richardson considers the infrastructure and age of the building when evaluating the value of a project for adaptive reuse, especially when the conversion is from an office to housing.

Richardson noted that the plumbing, electrical and safety devices in historic office buildings, such as those built between 1900-1980, will be outdated. He cited structures located downtown, Hollywood, and Santa Monica.

He said, "These are one type of project. They lack all infrastructure." "You are essentially purchasing a structure, and nothing else can be used."

Richardson looks at the strengths of structures built after 1980, including elevators with better maintenance that serve all levels, lobby areas, stairs, fire alarm panels with devices in every room, and fire sprinkler systems with automatic transfer switches, fire pumps, and emergency generators.

Sonani stated that these factors as well as the overall seismic retrofitting of existing buildings are a weighty burden for both developers and architects.

She said that when you switch from an office to a residential building, you must adhere to higher fire and seismic safety standards because the occupants are sleeping in this area. There are different code upgrades and safety requirements, which can sometimes lead to more expensive structural upgrades.

Vazquez suggested a solution in his letter to Bass and to the city. A multidisciplinary taskforce was formed by the city to study how to reduce the construction costs, and to shorten the approval period of the mandatory retrofit analyses for office-to-residential developments.

He wrote that a multidisciplinary taskforce is needed to help the engineering community understand the total cost of a mandatory seismic upgrade. It's important to remember that seismically upgrading a structure can be expensive, particularly if the goal is to keep a building partially occupied during construction.

Jurgenson says that adaptive reuse projects are expensive, but there will come a point where they no longer cost as much.

He said, "We are seeing buildings sell downtown for much less than what they were purchased for several years ago." There's only a certain amount that these companies will drop their rents. Therefore, the buildings must trade at a significant discounted price until the new owners can afford to lower rents so they can fill the spaces again. We will continue to see buildings trade downtown, but I believe we will reach an equilibrium before all of the high-rises are converted into residential.

The pros of adaptive reuse may be greater than the cons. Richardson's company specializes in adaptive reuse and despite his outspoken criticism of the industry's many complications, Richardson is still a fan of the development option.

Richardson stated that he enjoyed bringing new life to something abandoned. It's fun being a part. It's a joy to be able reuse things and share them with others.