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A newly released study highlights a growing crisis in Downtown Los Angeles, where office vacancy rates have reached historic highs and could pose major financial consequences for the city and county if left unaddressed.Â
The report, released by Downtown Works, the nonprofit arm of the Central City Association (CCA), warns that inaction could result in a staggering $69.5 billion decline in assessed office property value over the next decade, according to BisNow.
Soaring Vacancy Rates Could Drain Billions from City Revenue
Along with that drop, the city and county stand to lose an estimated $353 million in property tax revenue — funds that typically support essential services. The findings connect rising vacancy, now at 22% and projected to climb, with reduced property values and, in turn, shrinking revenue for Los Angeles’s General Fund.
Targeted Office-to-Housing Conversions Proposed as Solution
The study, conducted by BAE Urban Economics in partnership with architecture firm Gensler and commercial real estate giant CBRE, urges immediate steps to convert underused office buildings into housing. According to the analysis, such efforts could inject $12 billion in new assessed value and stimulate $2 billion in economic activity, while also addressing the region’s ongoing housing needs.
While not every vacant building is suitable for residential conversion, the report features a sample of 10 target buildings that could potentially be redeveloped into nearly 3,900 housing units. The individual properties were not identified, but the study positions these examples as a proof of concept for broader adaptive reuse.
Los Angeles is no stranger to this kind of redevelopment. The 1999 Adaptive Reuse Ordinance was a catalyst for the transformation of roughly 12,000 units from outdated buildings, helping shape Downtown’s rise as a sought-after neighborhood in the early 2000s.
Financial Incentives Needed to Support Viable Conversions
To make future conversions feasible, the study proposes exploring various financial incentives. These include tax abatements and development fee deferrals, although it notes that further research is necessary to determine which tools would be most effective for Downtown’s current market conditions.
The report presents a clear message: without decisive policy shifts and investment in adaptive reuse, Downtown Los Angeles risks not just continued vacancy, but deeper economic fallout in the years ahead.
