When the city council adopted an Adaptive Reuse Ordinance in 1999, hundreds of acres of empty floor space were stacked up along the downtown streets where the city's business had been done in the first half of the 20th century. Downtown's vacant vertical real estate was the equivalent in miniature of the empty suburban acres into which the city boomed after World War II.
The ordinance exempted a broad category of "historic buildings" from the code requirements and zoning limitations that are applied to new construction.
Fourteen years after the success of adaptive reuse, the results are still being counted: an estimated 29,429 apartments and condominiums and 46,400 residents, along with new restaurants, stores, markets, and almost too many cool bars.
Tom Gilmore was the first developer to turn a good idea into loft units, and his three buildings on the edge of Skid Row filled quickly. Other developers picked up other buildings, lobbied for more concessions from a willing city council, and went in and out of business in the way these businessmen do. Together, they brought downtown back to life.
But today, adaptive reuse as the main engine of downtown's recovery has nearly stopped.
The reasons are many. Success has driven up property values beyond the capacity of entrepreneurial developers like Gilmore. They used to pay $3 or $4 million for a 1920s office tower; now the price is often closer to $20 million -- the territory of big real estate investment trusts and hedge funds. But higher land values haven't been matched by higher rents for loft units, making profitability less likely for big players with impatient investors.
Adapting an old building to residential use also requires specialized skills -- skills that institutional buyers don't have on hand. The work of adapting an old building has become more expensive, too. And the gleaning of downtown's stately buildings has reduced the inventory of good buildings that can be reused.
As a result, the latest wave of downtown development is mostly new construction. It's simply less costly in time and money and organizational effort to build on an empty lot than to adapt an older building to new uses.
Not all development is new construction, however. Some reuse projects -- smaller in scale and on the margins of the hipper streets -- are planned. But more reuse could and should be done. Apart from preserving the city's historic streetscape, the reuse of an old building is inherently a green enterprise with environmental debts that are small in comparison to new construction.
To restore momentum, downtown's future needs new ideas for adaptive reuse:
- A smaller minimum unit size -- the current minimum is 750 square feet -- would make residential reuse more profitable and renting more affordable. Other cities are already exploring micro-apartments to expand lower-cost housing.
- Code and zoning changes could speed up the reuse of some older buildings as hotels, where initial development costs are lower and returns potentially higher.
- Downtown residents need employment in their neighborhood, particularly because the goal is a community less dependent on driving. Permitting small offices in live/work lofts that are currently limited to one person would increase employment options. So would a commercial reuse ordinance aimed at buildings that are unsuited to residential reuse but could be converted into workspaces if building codes were relaxed.