Development-friendly processes and availability of discounted office space are key reasons Orange County continues to outpace Los Angeles when it comes to converting underutilized office buildings, despite being a smaller market.
In the second quarter of last year, Orange County had more than triple the office conversions and redevelopments planned or under construction than L.A. County, according to CBRE. Orange County had 4.2 million square feet, compared to 1.2 million in L.A. This put Orange County in the No. 7 spot out of 58 national markets, and it was the only California market to crack the top 10.
Flash forward to the fourth quarter of last year, when L.A. came in hot with 3.3 million square feet of office space being converted or planned, up 171 percent from two quarters prior, according to CBRE. Still, Orange County kept the upper hand with 3.8 million square feet. While L.A.’s jump in activity is significant, the margin between the two markets weighs heavier considering L.A.’s population of nearly 10 million is more than three times its neighboring county.
Orange County’s lead appears to reflect an ability by local governments — there are 34 separate cities in the market — to connect the dots on adaptive reuse at a time of high vacancy in the office sector and a regional housing shortage.
Michael Bohn, partner at Long Beach-based Studio One Eleven, has worked on adaptive reuse projects in L.A. and Orange counties. He found the data surprising, given the difference in size between the two counties, though he chalked up the divide in part to Orange County’s business environment.
“Orange County is definitely more development-friendly than L.A. County,” he said. “It’s easier to navigate the bureaucratic channels of approvals.”
Bohn worked on the first adaptive reuse project in Santa Ana after the city passed an ordinance incentivizing these types of projects. The project, which was completed in 2020, converted an underperforming office building constructed in 1965 into a mixed-use affordable housing development dubbed the Santa Ana Arts Collective. During the planning process, Bohn found that the existing parking at the site fell slightly short of the city’s stall size requirements for new buildings but city officials made an exception.
“If a city doesn’t provide some flexibility, that can be the difference between a deal working or not working,” Bohn said, noting the high costs of parking in developments.
Kurt Strasmann, executive managing director of CBRE’s Orange County and Inland Empire operations, said Los Angeles “doesn’t do themselves any favors with some of their regulations.” In Orange County, on the other hand, the math on these deals “makes sense economically,” he said.
When investors can purchase office buildings at a discount — with many sales in the $100-$200 per square foot range in Orange County — multifamily redevelopment is a good move, considering the high value of residential real estate and the “instatiable” demand for more housing, Strasmann said.
Building age is another reason adaptive reuse can be easier in Orange County, said Jon Curtis, managing partner at Cedar Street Partners. Orange County generally has newer buildings than L.A. County, and because of that, adaptive reuse can be more straightforward when it comes to working with building systems such as air conditioning and staying up to date with newer codes.
In one project, Studio One Eleven is planning to convert a 1986-built office in Orange County into student housing. The seismic upgrades on this building will cost between $500,000 and $1 million, Bohn said, compared to the $5 million to $10 million it would cost for an older building.
For both counties, the statewide rollback of CEQA requirements did create a tailwind in getting adaptive reuse projects up and running, Curtis notes.
A more recent aspect of the strategy to increase housing production in the city of L.A. came with a recently passed ordinance expanding its previous incentive program for adaptive reuse projects, making newer buildings eligible. Previously, only buildings completed before July 1974 were a part of the program but now, as of February, the ordinance established a rolling 15-year rule, which means structures built in 2011 and prior are eligible now.
The new ordinance also expanded the geographic footprint of the incentive program citywide after years of being restricted to downtown and nearby neighborhoods and Hollywood. It will likely take time before the expansion of the ordinance shows up in the pipeline of projects.
Another law that’s specific to the City of Los Angeles also appears to be having an effect on housing production in the region. Measure ULA, which voters passed in November 2022, applies a 4 percent tax on all real estate transactions within the City of Los Angeles starting at $5.3 million and increases to 5.5 percent on deals of $10.6 million or more.
Between the second and fourth quarters of 2025, CBRE data shows the increase in adaptive reuse projects in L.A. County largely came from projects in Long Beach, Culver City and Pasadena — areas not bound by ULA — as well as Koreatown and Hollywood, which were included in the city’s prior adaptive reuse incentive program. Sherman Oaks and Encino each added a project in that time, too.
Bohn thinks the city’s new adaptive reuse ordinance is a step in the right direction and that more projects will be explored. Still, he considers the impacts of ULA – combined with high costs of construction and a labor shortage – a deterrent for actually driving construction on these projects, as opposed to planning. Currently, Orange County and L.A. areas not under ULA, such as Long Beach, are much more active, Bohn said.
While other California metros need to do more work to make adaptive reuse projects financially feasible, Strasmann said he expects Orange County to remain a frontrunner.
“I see this trend continuing. It’s like the ocean tide – it’s coming in and that doesn’t go out overnight,” he said. “… It’s a combination of the resi demand, the value of the property, and we’re the easier choice to do business in than some of our adjacent counties.”
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