LA Trails Only Manhattan in Future Apartment Conversions

Los Angeles has emerged as one of the nation’s hottest hubs for adaptive reuse, with 5,640 apartments in the pipeline — second only to Manhattan’s 11,000, according to a recent analysis.

Office buildings comprise 50 percent of the main target for conversion in L.A., with 11 such projects in development as of July, RentCafe.com determined using its Yardi Matrix data. They account for 2,843 apartments, roughly 50 percent of the city’s adaptive reuse housing pipeline.

L.A.-based Jamison Services is responsible for the three largest office-to-residential projects: 1055 West 7th Street, a 33-story office building downtown being redeveloped into 691 apartments; the L.A. Superior Court Tower at 600 South Commonwealth Avenue, a 19-story building at the edge of Lafayette Park being converted into 428 live/work apartments; and an 18-story high-rise at 695 South Vermont Avenue in Koreatown, which will yield 255 apartments.

“The beauty of adaptive reuse is you can build on it by right in Downtown L.A., and you don’t have to deal with the affordable and some of the other stuff new development has to do,” said CBRE’s Phillip Sample, who is marketing for residential conversion Jamison’s 811 Wilshire Boulevard, which is facing foreclosure. 

“So if you can buy a building and get to the bones of the building without a whole bunch of tenant mix issues, in a year you could break ground on the building with full permits.”

Building out the interiors instead of erecting a ground-up development can cut costs and construction time. 

Ground-up construction takes 18 to 24 months, said Kelly Farrell, a principal and head of the residential practice at Gensler. Conversions allow developers to “bring buildings to market faster,” she said.

The property at 811 Wilshire Boulevard is on the market with an asking price of $43 million, or $130 per square foot, Sample said. It includes a parking structure at 616 South Figueroa Street.

“You can’t build a building for $130 a foot,” he said. 

The landlord defaulted on debt connected to the 25-story, 337,000-square-foot building and a deal to sell it fell apart, The Real Deal reported. 

“They are in a maturity default,” Sample, a specialist in adaptive reuse, said. “Their loan came due. The owner has never missed any mortgage payment.”

Jamison has converted seven Adaptive Reuse Ordinance projects totaling 1,500 units.

Jaime Lee, CEO of Jamison, told The Real Deal in June that ground-up construction “just isn’t penciling because of a myriad of factors, but the conversion still works really well.”

Before the pandemic, developers built so much new office space that many older buildings are now underused and in need of repurposing, she said.

Conversions have become increasingly popular in L.A. since the city adopted its 1999 Adaptive Reuse Ordinance, which eased the process of turning historic or underused buildings into new uses, especially housing, followed by a revised version in 2024. And local leaders have promoted adaptive reuse as a means to help address L.A.’s housing crisis. 

Nationwide, there were 24,735 units developed from adaptive reuse projects last year, per RentCafe.com. Today there are roughly 181,000 apartments from adaptive reuse projects in various stages of development. 

“Jamison historically has a large office portfolio, a lot of it here in Los Angeles, so we’ve been using the adaptive reuse ordinance to convert a lot of those now vacant or close-to-vacant buildings to residential apartments, because we all know housing is needed and office is not needed as much anymore,” Lee’s brother Garrett Lee, president of Jamison Properties, said on a July panel sponsored by TRD.

At the time, the firm had four such projects under construction with two slated for completion by the end of the year.

From a financing standpoint, debt isn’t a problem, Garrett Lee said — “there definitely are loans to be made.” The real challenge, he added, is raising equity.

Not all buildings are viable for conversion.

A good candidate should have a floor-to-ceiling height of at least 9 feet for finished units and rectangular floor plates of about 8,000 square feet “to ensure adequate efficiency,” per information provided by CBRE. “Additionally, walkability and available on-site parking are significant advantages.”

Anjac Fashion Buildings, a real estate investment firm with a large downtown presence, converted the upper floors of the historic Singer Building into luxury residences in 2021. With the garment business on the wane, the owner thought it made sense to convert the former sewing machine company warehouse into seven lofts of 6,000 square feet each.

“The only reason why I was able to make it make sense is because it was something my father purchased back probably in the late 1960s,” said Steve Needleman, chairman of Anjac Fashion Buildings, who is pessimistic about development in L.A. today. 

While it may not make sense financially to acquire office buildings “for the purpose of converting,” Jaime Lee said, “if you’re an existing office holder” it could be a good option.

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