Repurposing Structures for Housing Affordability in Los Angeles
In the sprawling metropolis of Los Angeles, the need for affordable housing has reached a critical juncture.
The city's "Missing Middle," comprised of middle- and lower-middle-income households, is facing the harsh reality of skyrocketing housing costs. As we delve into the challenges of housing affordability, we'll explore an innovative solution that not only addresses this crisis but also promotes the social impact of real estate development.
The Challenge of Affordable Housing in Los Angeles
Los Angeles, often associated with glitz and glamour, harbors a pressing issue beneath its shining facade: the affordability crisis. The cost of living has been on an upward trajectory, pushing the "Missing Middle" closer to the brink. Surprisingly, even households with incomes as high as $91,000 find themselves part of this demographic, dedicating over half of their earnings to rent.
Over the past two decades, the city's housing development trends have favored luxury units, leaving the Missing Middle with limited options. Compounding the problem, many developers have repurposed affordable housing units into pricier, market-rate accommodations. The result? A staggering net loss of 98,000 affordable homes in Los Angeles from 2014 to 2021.
Repurposing Structures: A Viable Solution
Amid this housing crisis, repurposing existing structures emerges as a promising solution. It offers a cost-effective way to create affordable housing options while utilizing underutilized city spaces. Let's explore how this innovative approach can make a difference in Los Angeles.
Maximizing Underutilized Spaces
Los Angeles is home to numerous underutilized or vacant structures that have the potential for transformation. Abandoned factories, old warehouses, and commercial buildings represent valuable opportunities for repurposing. These spaces can be converted into affordable housing units, preserving the city's architectural heritage while meeting the demand for housing.
One notable example is the Arts District in Downtown Los Angeles. Formerly an industrial hub, it has witnessed a transformation in recent years. Abandoned warehouses and factories have been converted into trendy lofts and apartments, catering to a diverse range of residents. This adaptive reuse of structures not only provides affordable housing but also revitalizes neighborhoods.
Cost-Effective Renovations
Repurposing structures often involves renovations rather than ground-up construction. This can significantly reduce construction costs, making affordable housing projects financially feasible. By leveraging existing infrastructure, developers can allocate resources more efficiently and allocate more funds to creating affordable units.
For the first time, data from the American Institute of Architects (AIA) reveals that billings for reconstruction projects at architectural firms have surpassed billings for new construction projects. This trend, as noted by AIA's Chief Economist Kermit Baker, Hon. AIA, holds particular significance, and its connection to the pandemic is more intricate than one might assume. According to Baker, 'As far as our respondents are concerned, this rebalancing of new construction versus repurposing is a much more substantial and noteworthy trend.'
Examining the historical balance between new construction and reconstruction projects over the past two decades paints a revealing picture. Reconstruction has often been an underestimated sector within the realm of design and construction, primarily due to the inherent difficulty in tracking such projects accurately. When consulting industry analysts about the proportion of reconstruction work within the construction landscape, estimates typically hover around 20-25%. However, this figure is widely acknowledged to be an undercount due to the complexities of tracking reconstruction projects.
In contrast, the AIA has meticulously monitored this segment for the past two decades, and during its initial tracking in 2002, reconstruction projects already accounted for a considerably higher percentage, reaching the mid-30% range.
Over the past ten years, the combined private expenditure on both fresh construction and renovation has amounted to $1.6 trillion, with spending registering consistent growth nearly every year. In the institute’s inquiries with architecture firms regarding the primary objectives of the reconstruction projects they have undertaken within the last 12 months, they uncovered a noteworthy trend. The top two reasons were tied, each accounting for 25% of responses: adaptive reuse and conversion, along with fundamental interior modernization, both constituting a substantial 50% share of all survey participants
The Brewery Arts Complex, situated in the Lincoln Heights neighborhood, is a testament to cost-effective renovations. What was once a Pabst Blue Ribbon brewery is now a vibrant community of artists and residents. The adaptive reuse of this historical site demonstrates how existing structures can be repurposed to provide affordable housing.
Sustainable Development
Repurposing structures aligns with sustainable development practices. It minimizes waste and reduces the carbon footprint associated with new construction. By preserving existing buildings, developers contribute to environmental conservation while addressing housing affordability.
According to a post by the Architecture, Engineering, Construction, Operations, and Management (AECOM), the construction and building sector bears responsibility for 39 percent of the world's total carbon emissions. Among these emissions, 28 percent arise from operational sources, which pertain to the energy consumed for heating, cooling, and lighting within structures. The remaining 11 percent corresponds to embodied carbon emissions, encompassing the upfront carbon footprint linked to materials and construction procedures throughout the entire lifecycle of a building.
Undertaking an extensive renovation of an existing building offers the potential to reduce operational carbon emissions, all while avoiding the emissions typically linked to constructing entirely new structures. Embodied carbon, which encompasses emissions from constructing a new building and its eventual demolition, plays a significant role in this context. More than 60 percent of embodied carbon emissions can be attributed to components such as the substructure, frame, upper floors, and roof of a building. Through a comprehensive renovation, these essential elements can be preserved, resulting in a refurbished building with an average carbon footprint that is merely half that of a newly constructed replacement.
The Old Bank District in Downtown Los Angeles showcases the sustainability benefits of repurposing. Historic bank buildings have been transformed into stylish apartments, preserving their architectural charm. This approach not only saves resources but also fosters a sense of community in the heart of the city.
Community-Centric Approach
Repurposing structures allows developers to integrate affordable housing seamlessly into existing neighborhoods. This community-centric approach promotes social cohesion and inclusivity. Residents have access to established amenities, public transportation, and local services, enhancing their quality of life.
The Rowan Building in Downtown Los Angeles underwent a transformation into the Rowan Lofts. This adaptive reuse project brought affordable housing to a vibrant neighborhood, fostering a sense of belonging among residents. The integration of affordable units into the fabric of the community promotes diversity and community engagement.
What other large cities are doing
Certainly, repurposing structures as a viable and effective solution for various urban challenges has been implemented in several cities across the United States. Here are some examples of places where adaptive reuse of structures has made a significant impact:
1. New York City, New York:
New York City has embraced repurposing structures as a solution to address the shortage of affordable housing. The city's Housing Preservation and Development agency has initiated programs that promote the transformation of old buildings, including factories and warehouses, into affordable housing units. This approach has not only expanded the affordable housing inventory but has also revitalized neighborhoods. Source: New York City Housing Preservation and Development
2. San Francisco, California:
San Francisco faces a similar housing crisis to Los Angeles, and repurposing structures has played a role in mitigating the issue. Developers have converted historic buildings and underutilized spaces into affordable housing options. The San Francisco Planning Department has actively supported such initiatives, contributing to the preservation of architectural heritage while addressing housing needs.
3. Portland, Oregon:
Portland has seen an increase in adaptive reuse projects aimed at creating affordable housing. The city's Bureau of Planning and Sustainability encourages developers to repurpose old commercial buildings and warehouses into affordable housing units. This approach aligns with the city's sustainability goals and promotes urban density. Source: City of Portland
4. Chicago, Illinois:
Chicago has a rich architectural history, and many historic structures have been repurposed into affordable housing options. The city's Department of Planning and Development has supported the rehabilitation of older buildings, contributing to the preservation of Chicago's architectural heritage while expanding affordable housing choices. Source: City of Chicago
5. Boston, Massachusetts:
Boston has implemented adaptive reuse strategies to create affordable housing in a high-cost real estate market. Non-profit organizations, such as Preservation of Affordable Housing (POAH), have been at the forefront of repurposing historic buildings into affordable housing units. These projects have breathed new life into neighborhoods while addressing the affordability challenge. Source: Preservation of Affordable Housing
Conclusion - A Transformative Approach
The affordable housing crisis in Los Angeles demands innovative solutions, and repurposing structures offers a compelling way forward. By maximizing underutilized spaces, conducting cost-effective renovations, embracing sustainability, and adopting a community-centric approach, we can address the needs of the "Missing Middle" while revitalizing the city.
Investing in real estate funds like the FNX Impact Investment Fund provides an opportunity to support such transformative projects. Together, we can reshape Los Angeles' affordable housing landscape, making it a place where everyone can thrive. Join us on this journey to enact positive societal transformation while securing robust financial returns. Together, we can build a more inclusive and vibrant Los Angeles.
Disclaimer: This article is for informational purposes only and should not be considered as financial or investment advice. Please consult with a qualified financial advisor before making any investment decisions.
Endowed with vast expertise in financial and accounting management, Joumana Nasser is fundamental in providing the financial precision, transparency and accountability in FNX Development's real estate endeavors. Kickstarting her career post a business management degree from California State University-Northridge, Joumana navigated the intricate world of Bank of America's foreclosure department in 2010.
Transitioning through prominent roles, her command over sales, finance, and accounting steered her towards Agoura Hills Financial and eventually, the FNX Development Impact Fund. Joumana's unparalleled attention to detail ensures that figures are spot-on and timelines are met. At the forefront, she masterfully navigates finance and construction accounting, ensuring each project stands on firm financial ground.
Passionate about social causes, Joumana actively supports projects focused on children, disaster relief, education, and more.
