California’s many half-empty office buildings and vacant large stores may soon become new

leaseholds

to life. Thanks to local and state efforts to relax land use laws, developers in California will soon find it much easier to convert commercial properties into apartments, condominiums and townhomes.

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The change couldn’t have come at a better time.

Every week there seems to be more bad news coming out of the commercial real estate industry. Commercial high-rise owners in San Francisco and Los Angeles have defaulted on their loans, and an increasing number of office buildings in the state are considered zombies because they are only half-rented. Some recent high-profile exits, including the decision by retail giant Westfields to walk away from downtown San Francisco Center, are a reminder that store vacancy rates in many cities are still higher than they were before the pandemic.

But forget the urban doom loop talk. The moribund suburban malls and downtown office buildings present a tremendous opportunity for California to address one of its most pressing problems: the crippling housing shortage that has driven rents and home prices to unaffordable levels.

Most California cities don’t allow residential construction in commercial zones, or they make land conversions so time-consuming and expensive that few developers bother. That is finally changing, and it will unlock real estate that was off limits to housing.

Perhaps the biggest reform will come on July 1, when Assembly Bill 2011 goes into effect. The bill, written by Councilman Buffy Wicks (D-Oakland), will accelerate approval to build 100% affordable housing on most properties zoned for retail, office or parking. The law also gives accelerated approval to projects with a mix of competitive and affordable housing when they are located on four- to eight-lane commercial corridors. An analysis suggested that underused commercial real estate in Los Angeles County could accommodate 1.6 million residential units.

Jimmy Silverwood, president of Affirmed Housing, plans to use AB 2011 to develop up to 200 affordable units on a five-acre vacant commercial lot outside Sacramento. His company, which specializes in building homes for low-income families, veterans and the formerly homeless, is also seeking vacant shopping centers surrounded by sprawling parking lots for development. The law, he said, is especially helpful because it exempts projects from the California Environmental Quality Act, giving developers assurance they won’t be held up by the threat of CEQA lawsuits.

AB 2011 is aimed at placing new homes on commercial lots. But there’s also finally momentum to ease restrictions on adaptive reuse, especially as more offices go vacant following the shift to remote working. Renovating existing office and retail properties makes a lot of sense. The projects can help revitalize sleepy commercial centers, preserve local architectural history and character, and reduce the environmental impact of new construction.

But adaptive reuse can be just as expensive as new construction. That’s why the state has allocated $400 million over two years to encourage private adaptive reuse projects.

New bills this year include Assembly Bill 1532, which would

fast number fast number

office-to-home conversions, if they include affordable units. Assembly Bill 529 aims to modernize the state’s building codes to make it easier to convert office and retail buildings into residences. This is important. It can be prohibitively expensive

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30, 40 or 50 year old building by contemporary standards. The state codes should give adaptive reuse projects more flexibility without sacrificing essential safety standards.

Los Angeles is a pioneer in adaptive reuse. The city’s ordinance of 1999 allowed developers to convert downtown buildings dated 1974 and older. That resulted in 12,000 homes in 15 years

that is almost 10% of the housing in the city

. Now the Planning Department is working on an ordinance to allow city-wide adaptive reuse on properties older than 15 years. It is an overdue expansion of a successful program. expect planners

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Mid-rise office tower conversions on the Westside and in the Valley, opening up communities that can withstand new housing.

It’s a hopeful sign that local and state lawmakers have been willing to relax zoning laws to encourage redevelopment and adaptive reuse. California cannot afford to let offices and malls stand empty while the need for housing is so great.