The pandemic has upended the way we work and emptied office buildings. Commercial vacancy nationally is at 38%. Additionally, most workers are returning to the office “hybrid” for 2 days of the week. This new dynamic is hollowing out downtown areas, closing supporting businesses and creating blight.
At the same time we have an extreme lack of affordable housing. As a solution the State of California has mandated over 2.5 million housing units in less than a decade with local municipalities tasked to fulfill that requirement.
Local resistance to new development to meet those housing numbers can be overcome with converting vacant or underutilized commercial properties to residential. There is strong community support to reuse existing buildings which often come with parking and services. Conversion to residential will inject vitality in downtown areas, support local businesses, maintain a tax base and create diversity. It is a profitable alternative to vacant commercial space.
In the pipeline to help convert commercial space is California State Bill 1369 which was proposed this year and will legislate adaptive reuse and create opportunities for new housing. Governor Newsom has allocated $500 million in the 20022/23 budget to facilitate these projects. This reflects significant State support along with local support to establish a new equilibrium with more residential units and the right amount of commercial space. It is now up to us to get it done.
