Los Angeles Care Tower Conversion Sets Developer Example

As downtown Los Angeles continues a lengthy post-pandemic office market recovery, the plummeting of values so far could prove beneficial in addressing another looming issue: The city’s housing crisis.

Case in point: The redevelopment of the L.A. Care tower downtown into high-end housing, The Los Angeles Times reported.

Developer Garrett Lee of Jamison Properties is preparing to begin the transformation of the nearly 610,000-square-foot building at 1055 West 7th Street into 691 luxury residences, a plan, first floated in 2023. Current tenants include the Central Civil West courthouse of Los Angeles Superior Court and the Los Angeles County Department of Public Health.

As it stands, Downtown L.A. has 54 office buildings that are at immediate risk of losing value, with a potential $70 billion possibly disappearing over the next 10 years, according to a new report from BAE Urban Economics and cited by the Times. That worst-case scenario would create a loss of $353 million in property tax receipts and other related revenue streams for the public sector.

“Declining assessed values are likely to translate into significant losses in General Fund revenue” for the city, the report said. Housing conversions such as the L.A. Care tower project might be a silver bullet to increase buildings’ values and occupancy rates, according to the report.

If developers converted 10 large office buildings into housing, it would boost their combined assessed property value by $12 billion over a decade, the report said. That would add $46 million in tax revenue and more than 3,800 residential units to the housing supply.

Apartment occupancy in Downtown L.A. has been slightly higher than pre-pandemic levels at about 90 percent. The city center has also seen a spike in housing construction in recent years, with 22 percent of new housing built in the city over the past decade rising in downtown, according to the Times.

Turning unused offices into housing is on city officials’ list of priorities, Rachel Freeman, the city’s deputy mayor of business and economic development, told the Times.

“We have a deep need for more housing at all levels of affordability,” Freeman said. “Adaptive reuse has the potential to be a tool to help achieve our goals towards housing production and also the revitalization of our core urban centers.”

— Chris Malone Méndez