A new study released today by Downtown Works (DTWX), the nonprofit arm of the Central City Association (CCA), warns that Downtown Los Angeles could lose up to $84 billion in economic value over the next decade if action isn’t taken to support the adaptive reuse of its commercial properties. With office vacancies at record highs and the housing shortage worsening, the study highlights a critical economic threat the City can no longer afford to ignore.
Yet while the cost of inaction is steep, the report also highlights a clear solution. Converting just 10 vacant office buildings into housing over the next 10 years could add $12 billion in assessed property value, generate $2 billion in new economic activity, support over 1,600 jobs annually, and create thousands of urgently needed homes.
“Downtown LA is hemorrhaging value, and with it, opportunity,” said Nella McOsker, Downtown Works board member and President & CEO of the Central City Association. “We can’t risk falling further behind, and adaptive reuse is a clear and proven strategy to breathe new life into our city center.”
Key Findings:
Without intervention, Downtown Los Angeles could see a $69.5 billion loss in assessed property value for the office market, along with $353 million in potential lost property tax revenue for the City and County over the next decade.
A targeted 10-building adaptive reuse plan could:
- Recover $12 billion in assessed property value
- Generate $2 billion in local economic activity
- Unlock $46 million in tax revenue
- Support almost 17,000 jobs
- Create thousands of new homes
When combining the projected $70 billion loss from maintaining the status quo with $14 billion in foregone gains due to limited adaptive reuse, the total economic loss could reach $84 billion over 10 years.
These findings underscore the urgent need for immediate, coordinated action. Modernizing planning and building codes, along with introducing targeted financial incentives, such as tax abatements, grants, and fee waivers, will be critical to making adaptive reuse projects financially viable.
“With vacancy rates at historic highs and housing needs more urgent than ever, Downtown LA must evolve,” said John Adams, Downtown Works board member and Co-Regional Managing Principal at Gensler. “Adaptive reuse offers us a rare chance to meet our housing goals, help give Downtown a much-needed boost, and jumpstart the City’s long-term economy, all at once.”
The study was conducted by BAE Urban Economics, with support from Gensler and CBRE. It is available online at www.ccala.org/reports/.
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About DTWX
Founded in 2011, Downtown Works (DTWX) is the 501(c)(3) nonprofit arm of Central City Association (CCA), created to advance CCA’s mission of enhancing the region’s vibrancy for residents, employees and visitors. DTWX promotes public engagement and understanding of Downtown LA’s most important opportunities and elevates solutions to its challenges to achieve a more equitable future. For more information, please visit www.dtwx.org.