What ARO 1.0 (1999) Did for Downtown Los Angeles

This policy worked better than expected:

• Over 12,000 housing units were created in just 15 years

• Iconic buildings like the Eastern Columbia Building and Spring Arcade were brought back to life

• The policy showed how flexible rules could unlock housing — without needing new land or full-scale demolitions

But there was a problem: the ordinance only applied to Downtown, not the rest of the city. That meant large areas — like the Westside, San Fernando Valley, and South LA — missed out on these benefits. Plus, many newer buildings were excluded, even though they were no longer used as offices.

Why Los Angeles Updated the Ordinance to Work Citywide in 2024

By the 2020s, the office vacancy problem had spread far beyond Downtown. Remote work became normal, and companies didn’t need as much space. Meanwhile, LA was falling behind on its state housing goals. Under California’s Housing Element law, the city must plan for over 450,000 new homes by 2029.

To keep up, local leaders realized the city needed new tools — and fast.

Here’s what they set out to do with Adaptive Re‑Use Ordinance 2.0:

• Allow more buildings — not just those built before 1974

• Apply the rules across the entire city, not just Downtown

• Cut down on red tape to speed up housing approvals

• Encourage affordability while giving developers useful incentives

In 2024, the updated ordinance was officially approved.

What Changed Under Adaptive Re‑Use Ordinance 2.0 — and Why It Matters

The updated policy is broader, simpler, and easier to use. It’s built to meet today’s housing needs while using what we already have — empty buildings.

Buildings at Least 15 Years Old Can Now Be Converted Without Special Approvals

This is the biggest shift in the ordinance.

Now, any commercial building 15 years or older qualifies automatically. And if a building is between 5 and 15 years old, it may still qualify — but it needs a Conditional Use Permit (CUP).

This opens up huge potential across LA, from underused business parks in the Valley to old hotels near LAX.

The Approval Process Is Now Faster and More Predictable

Before, converting a building meant facing LA’s complicated planning system. Developers often got stuck in red tape — environmental reports, plan reviews, and unpredictable hearing schedules.

Under the new rules:

• No new Environmental Impact Report (EIR) is needed

• Many projects are exempt from site plan review

• Zoning approvals are clearer and faster, especially for eligible buildings

This means shorter timelines, fewer delays, and more predictable costs — all key to getting housing built quickly.

Old Building Design Standards No Longer Block Creative Housing Layouts

In the past, strict rules made many conversions impossible — especially in odd-shaped buildings. Now, ARO 2.0 removes those barriers:

• No minimum unit sizes — micro-units and dorm-style layouts are allowed

• Open space rules are flexible — especially for smaller lots

• Parking minimums are waived — especially near public transit

• Roof decks and communal areas don’t count against floor space

This gives developers freedom to design for modern lifestyles — and fit more homes into the same space.

Incentives Encourage Affordable Housing and Community Benefits

While the ordinance creates new opportunities, it also includes checks to make sure the public benefits. For example:

• Developers must pay a Linkage Fee, which funds affordable housing programs

• Projects that include income-restricted units may get bonus incentives like added height or density

• Historic buildings get added flexibility under state preservation laws

This balanced approach encourages growth — without leaving behind lower-income communities.

How Government Incentives Make Office-to-Housing Projects More Feasible

Turning an office building into homes takes more than just a good design. Developers also need funding, fast approvals, and fewer risks. That’s why Los Angeles didn’t stop at passing Adaptive Re‑Use Ordinance 2.0 — it backed the policy with help from local, state, and federal programs.

These incentives play a big role in making projects pencil out — especially when building costs are high or older structures need major upgrades.

The City of Los Angeles Has Aligned Adaptive Re‑Use With Its Housing Goals

ARO 2.0 works hand-in-hand with other city programs designed to meet LA’s state housing target of 450,000+ new homes by 2029.

Here’s how it fits into the bigger picture:

• Housing Element Compliance: The reuse ordinance supports LA’s long-term housing plan by unlocking more sites.

• CHIP (Citywide Housing Incentive Program): This new program stacks incentives like parking waivers, extra floor area, and faster review for qualifying housing projects.

• Zoning Code Updates: Citywide zoning reforms allow more mixed-use and residential development in commercial corridors — a key feature of ARO 2.0 projects.

These overlapping programs give developers more tools — and more confidence — to move forward with conversions.

California Has Made Office-to-Housing Projects a Statewide Priority

It’s not just Los Angeles pushing for more adaptive reuse. The State of California is investing big to make conversions easier everywhere.

Key policies include:

• The Office-to-Housing Conversion Act (2023), which encourages cities to allow by-right conversions and relax local codes.

• $400 million in state grants to help cities fund predevelopment studies, infrastructure upgrades, and affordable housing components.

• CEQA streamlining for qualifying reuse projects — especially those near transit or in existing buildings.

This kind of state support helps reduce costs and remove delays — especially for projects that might otherwise get stuck in long environmental reviews.

Federal Programs Offer Tax Credits and Low-Cost Financing

While most policy action happens at the city or state level, the federal government offers key financial tools that help close funding gaps.

Here are a few programs developers rely on:

• Federal Historic Tax Credit: Offers a 20% tax credit for certified rehab work on eligible historic buildings. This is especially helpful for preserving LA’s older office towers and theaters.

• HUD CDBG (Community Development Block Grants): Cities can direct federal funds toward adaptive reuse when the project includes affordable housing or supports public infrastructure.

• TIFIA and RRIF Loans: These federal programs fund transportation-linked housing projects. If a reuse site sits near a Metro station, it may qualify for low-interest financing.

These incentives won’t fully fund a project on their own, but when combined with city and state support, they make more conversions viable.

How These Incentives Work Together to Support Adaptive Re‑Use Projects

Think of these programs like puzzle pieces. On their own, each one helps a little — but together, they reduce both cost and risk.

This “stacked” approach to incentives gives developers a much better shot at getting financing, securing permits, and starting construction — especially in areas where conversions might not otherwise make financial sense.

How Other U.S. Cities Are Turning Offices Into Homes

Los Angeles isn’t the only city trying to fix its housing crisis by reusing empty office buildings. Across the country, many cities are dealing with the same issue: too much unused office space and not enough housing.

To solve this, cities like New York, San Francisco, and Chicago are changing their laws, offering tax breaks, and speeding up permits. Each city has its own approach, but the goal is the same — turn unused buildings into livable homes.

New York City Wants to Turn Midtown Offices Into Apartments

New York is updating its zoning laws through a plan called “City of Yes for Housing Opportunity.” The goal is to make it easier to turn older offices into homes — especially in Midtown Manhattan.

Here’s what they’re doing:

• Letting housing projects happen in more parts of the city

• Making it easier to build smaller apartments, including shared living spaces

• Allowing bigger buildings with more housing (by changing floor area rules)

• Giving tax breaks if developers include affordable units

If the plan works, the city could create up to 20,000 new homes in central neighborhoods where office buildings now sit empty.

San Francisco Is Offering Tax Breaks and Relaxed Rules

San Francisco’s downtown office vacancy is one of the worst in the country. In response, the city is giving developers more freedom to convert offices into housing.

Here’s what’s changing:

• The city waived transfer taxes for office-to-housing projects

• It relaxed rules about unit size, window access, and outdoor space

• The planning department created a guide to help developers

• Some city-owned buildings are being turned into housing for students or low-income residents

These changes are already attracting developers — especially in areas like SOMA and the Financial District.

Other Cities Are Testing New Reuse Programs

Many other cities are also trying adaptive reuse — each in their own way. Some are offering money. Others are changing zoning. Here’s how some of them compare:

What Los Angeles Can Learn From These Cities

Los Angeles is already ahead in many ways. ARO 2.0 covers the whole city and makes it easier to start a project. But there are still ideas LA could borrow from other cities:

• Funding support like Chicago’s could help more projects move forward

• Clearer project guides, like San Francisco’s, could help smaller builders

• More affordable housing incentives, like those in D.C., could help meet citywide housing goals

• Flexible zoning for shared housing, like in New York, could make deeper buildings usable

Each city is still learning, and so is Los Angeles. As more buildings get converted, there will be more chances to improve the process.

How the Office-to-Housing Conversion Process Works in Practice

Adaptive reuse sounds simple — turn an old office into housing — but it’s rarely that easy. Every building is different. Some have layouts that work well for apartments. Others don’t. And even with ARO 2.0 in place, the process still involves several key steps.

Let’s walk through what really happens when a developer decides to convert an office into housing.

Step 1: Check if the Building Can Be Reused

Before anything is built, the developer needs to study the building. Not every office is a good match for housing.

They usually look at:

• The building’s shape — Does it have enough windows, or is it too deep inside for natural light?

• Structural layout — Can rooms, kitchens, and bathrooms fit inside the existing floor plan?

• Plumbing and electrical systems — Will it be too expensive to add the pipes and wiring needed for homes?

• Code upgrades — Does the building meet today’s safety rules, like earthquake protection or fire exits?

Some buildings — especially older or historic ones — are easier to reuse. Others may need too many changes to make the numbers work.

Step 2: Apply for Permits and Final Approvals

With ARO 2.0, many approvals are faster. But developers still need to follow the rules and submit detailed plans.

That usually includes:

• Drawings that show how units will be laid out

• Reports showing that the building meets fire, seismic, and accessibility standards

• Inspections from city departments before construction begins

• Coordination with LADBS (Department of Building and Safety) and, if needed, the Planning Department

If the building is more than 15 years old, the project can move forward “by right.” That means no extra approvals or hearings are needed. But if it’s between 5 and 15 years old, the developer must request a Conditional Use Permit — which takes more time and public input.

Step 3: Do the Construction — and Deal With the Cost

Once approvals are in place, construction begins. This is where many of the big costs show up.

Unlike new construction, where everything is built from scratch, adaptive reuse projects must work around what already exists. That often means:

• Upgrading old plumbing and electrical systems

• Rebuilding stairwells or elevators to meet modern codes

• Cutting new windows or adding light wells for better ventilation

• Reinforcing the building to meet seismic rules, especially in LA

These upgrades take time, and they aren’t cheap. In fact, many reuse projects end up costing more per square foot than building new.

That’s why incentives from ARO 2.0 — like faster permits, flexible design rules, and bonus zoning — are so important. Without them, many buildings would stay empty.

What Cities Are Doing to Support Office-to-Housing Conversions