The West Hollywood Planning Commission’s Long Range Planning Projects Subcommittee met Thursday to discuss plans for converting commercial properties into residential housing.
West Hollywood is required to build 3,933 new housing units across various income levels under the latest Regional Housing Needs Assessment (RHNA). One potential solution is converting commercial buildings, like offices, into housing, known as adaptive reuse.
The staff report highlighted that repurposing existing buildings supports sustainability by extending their life. However, financial, physical, and regulatory challenges often make these projects less appealing.
One of the main hurdles is that converting commercial spaces to housing tends to be less profitable than keeping them as offices. Higher development costs and possibly needing to buy out current tenants add to the issue. Zoning regulations, building codes, and development standards like open space requirements also pose obstacles, making these conversions difficult or expensive.
Many commercial buildings aren’t designed for residential use and would need significant renovations to meet current codes. For example, the city requires multi-family projects to include private open space and additional common areas, which can complicate conversions.
There are also challenges with building codes, such as accessibility and seismic upgrades, and compliance with the updated California Energy Code and CalGreen. Requirements related to affordability and unit size, along with the lengthy permitting and approval process, can deter developers from taking on these projects.
The report noted that demolishing an existing building and constructing a new one, which could accommodate more housing, is often more cost-effective.
Several factors determine whether a building is suitable for adaptive reuse, such as the building’s design and layout. Buildings with repetitive floor layouts, shallow rectangular shapes, and enough gross area are better suited for conversion.
Older buildings are more likely to be converted, though they may face significant retrofitting issues. Buildings with more than 50% vacancy are also good candidates for adaptive reuse.
Converting hotels and motels into housing is generally less risky and more affordable because they are already designed for temporary residential use. The average cost per unit for hotel-to-housing conversions in California is around $130,000, much lower than other conversion types or new construction.
Other cities in the region, like Los Angeles, have adopted adaptive reuse ordinances to encourage conversions. In Downtown Los Angeles, the 1999 Adaptive Reuse Ordinance resulted in more than 12,000 new housing units, and updates are being proposed to expand eligibility and incentives.
Some cities have addressed barriers to adaptive reuse by waiving development standards and offering process incentives. For example, Beverly Hills allows applicants to request relief from open space requirements and is considering changes to density calculations for conversion projects.
State laws like Assembly Bill 2011 (AB 2011) and Senate Bill 6 (SB 6), effective as of July 1, 2023, allow residential development on sites currently zoned for commercial uses. These laws aim to simplify the approval process and make development standards more flexible.
AB 2011 and SB 6 permit commercial-to-residential conversions without needing special approval, as long as they meet specific development standards. Recent legislation, including AB 1490 and AB 529, encourages adaptive reuse projects, particularly for affordable housing. AB 1490, for example, streamlines affordable housing projects that adaptively reuse existing buildings, even if local zoning regulations would otherwise prevent it.
Pending bills like AB 3068 and AB 2910 aim to remove more barriers to adaptive reuse. AB 3068 would make adaptive reuse projects a “use by right” in all zones, meaning they would not require special approval if they meet certain requirements.
West Hollywood has a relatively low vacancy rate for office space at 11.8%, compared to 15.4% in the Los Angeles region. Since much of the city’s existing building stock is already multi-family residential, there are fewer opportunities for commercial-to-residential conversions.
The city has identified a few buildings and areas, like the Emser Tile building on Santa Monica Boulevard, the Pacific Design Center, and the Sunset Boulevard corridor, as potential candidates for conversion.
In the past several years, only one commercial building was converted to residential use. A 1962 medical office building on Beverly Boulevard was transformed into a condo complex in 2022.
Although it is unclear how much demand there is for commercial-to-residential conversions, the report suggested that removing barriers to such projects would help the city reach its housing goals.
The subcommittee sought feedback on various policy questions, including what types of projects should be covered by a zone text amendment, what limitations should apply, and how to address affordability and potential incentives.
Staff could use this feedback to conduct further analysis and draft a zone text amendment for City Council consideration. Topics included whether to focus on all conversions or just office spaces, partial versus full conversions, and whether to consider new construction and additions. Potential limitations could include specific geographic areas or building types.
Affordability was also a key concern, with discussions on whether to offer waivers and incentives only for projects that include affordable housing.
Potential incentives could involve streamlining the approval process and waiving some development standards. A separate Ministerial Permit Zone Text Amendment is currently being proposed to allow ministerial review for projects that qualify under state laws.
This is called “adaptive re-use” and it could be useful in places where we have empty office spaces or even under utilized hotels. It is not a new concept to West Hollywood but any thing that streamlines the process is positive.