Hello, LOs!
The pandemic has turned commercial districts into ghost towns.
Take California: nearly a quarter of office space in Los Angeles is vacant, according to a Savills study. It's worse in Santa Monica, the report found, where nearly a third of all office space is empty. In San Francisco, the city-wide office vacancy climbed to 15.1% by the end of the first quarter, a recent Avison Young report found.
Meanwhile, the housing shortage is bad. Really bad. A Goldman Sachs analyst wrote that the supply of homes is the lowest it has been since the 1970s. Homebuilders aren't going to be able to build us out of this crisis anytime soon, due to land, lumber and appliance prices, as well as slow shipping and delivery times, reporter Tim Glaze writes.
It didn't take long for California lawmakers to come up with a plan in the form of legislation to turn the languishing office space into housing. It passed the California state senate at the end of May, and now awaits passage in the state Assembly.
Let's take a look at what it would do:
Currently, in order to build residential on a lot zoned for retail or office, developers have to first give notice of a public hearing. Then the board of zoning adjustment or zoning administrator decides whether it goes forward. After that, the county would have to craft a plan to "guide the future growth of a community." The local government then has to determine if the site can accommodate its "fair share" of its region's housing needs by income level.
According to the bill's authors, it would "allow cities to approve, through an expedited process, the reuse of infill property zoned for retail and office space for residential construction." The bill authors write that properties such as strip malls could be redeveloped into housing, to reflect changing consumer preferences.
The bill is definitely not a sure thing. In 2020, a similar measure failed in the state Assembly. Another bill which would have made specified housing developments an authorized use on commercially-zoned land died in the Senate's housing committee.
So, LOs, tell me what you think — could turning office buildings into homes help the housing shortage? Or is this a terrible idea? Email me anonymously at gkromrei@housingwire.com
Georgia Kromrei
Senior Mortgage Reporter, HousingWire
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