Los Angeles is known to be one of the main markets for apartment conversion projects. In other words, dilapidated or disused buildings in Los Angeles are often turned into apartments, an asset class in high demand in the market. Following the pandemic, which has severely hampered hotel revenues, hotel properties could become the next preferred asset class for apartment conversion projects.
“Given today’s travel circumstances and restrictions, hotels could make a comeback as the preferred building type for transformation. And, with ever-changing work environments, office buildings could become the next preferred building type to convert ”, Alexandra Ciuntu of Yardi rental cafe GlobeSt.com says.
In the wake of the pandemic, there will likely be a trend towards adaptive reuse projects rather than new construction, especially under pressure to bring more apartments to market quickly. “Adaptive reuse is a great way to conserve historical value and development resources all at once. In addition, minimizing new construction has become an integral part of building sustainability, ”explains Ciuntu. “Beyond reinventing an existing building, developers have the ability to give back and beautify communities through conversions. “
There are currently six apartment conversion projects in Los Angeles, according to data from Rent Café. These projects allow apartment developers to increase the supply of apartments. “All the more so thanks to apartment conversions which can put a large number of units on the market while retaining or even adding historical value,” Ciuntu explains.
According to Ciuntu, these projects are actually healthy for the market. “Conversion leads to preservation, affordable housing and can even revitalize entire cities for transformative effects in communities across the United States,” she says. “A nostalgic factor, a love of urban history or just an appreciation for old and sustainable architecture and it is easy to see why such redevelopment projects are welcome.”
The latest boom in apartment conversion projects followed the 2008 financial crisis when the recovery started in 2010. 780 buildings with over 96,500 apartments, ”Ciuntu explains. “Nationally, 2017 marked the year with the highest number of conversions on record: 119 buildings with nearly 15,500 new apartments.
Over the past two decades, hotels and office buildings have been the most popular properties for apartment conversion projects, which justifies this happening again.