The main reason housing is unaffordable today is due to lack of supply. Los Angeles, with a typical home value of $902,989, is one of the most expensive places to live in America. Zoning restrictions for housing, which limits supply, are partly to blame for high prices in LA. The City of Angels is trying to change zoning restrictions to allow for more residential housing in the downtown area, an area that's already experiencing the largest development boom since the 1920s.
The downtown LA area (DTLA) covers about 6 square miles, or about 1% of the city. For decades, downtown LA was mainly a place for workers to commute to, not live in. In 2000, the population of downtown was about 28,000. In 2019, it jumped to more than 80,000. City planners predict that by 2040, downtown will be home to 125,000 people. And those people will need housing.
The proposed plan
The City Planning Commission (CPC) has been developing a downtown community plan and new zoning code. No action has been taken yet, but the planners say the city is "enjoying a renaissance." Because more people are moving to DTLA, the plan calls for increasing the amount of residential zoning for the area to 60%, up from its current regulations that allow only 33% of zoning to be residential.
Residential real estate investors take note
Zoning for residential doesn't guarantee residential housing will be built, but changing the zoning rules to allow for more residential projects should have a big impact, says Jaymes Dunsmore, an urban planner. According to Dunsmore, the current situation makes it difficult to get residential projects approved, as they must go through a complicated approval process, one that can take years and adds to the cost of building housing, according to Nora Frost, a director of public information for LA City planning.
The new plan would allow for the following:
- More infill development.
- More live-work housing.
- Both affordable and market-rate housing to be built.
- Expansion of the area where housing is allowed.
- Residential intensification (allowing a higher density).
- Adaptive reuse of existing buildings.
Will there be restrictions?
Changing zoning is a step in the right direction to encourage residential development. But this is California we're talking about. The question for developers remains whether the city can resist adding restrictions.
For example, how much regulation will remain? The downtown plan already includes affordable housing and open green space as part of the plans. Depending on how heavy-handed the restrictions are, developers may choose to build elsewhere. Too many restrictions often don't align well with the bottom line financially.
What's happening so far in LA
The LA Downtown Center Business Improvement District (BID) highlights the residential projects already underway and proposed. They include:
- The Grand, which will have 436 residential units, 176,000 square feet of retail, and an Equinox Hotel.
- 520 Mateo will have 475 apartments, 105,000 square feet of office space, and 55,000 square feet of open space.
- 20 residential projects that will offer 4,829 units.
- Also proposed for the area are 29,000 new residential units.
The Oceanwide Plaza, a $1 billion mixed-use development that would have had 265 residences, stopped construction, however, due to money problems.
The Millionacres bottom line
There is a downtown LA development boom. But there are still large problems with residential housing, affordability issues, and car dependency. Stay tuned to find out what the City Planning Commission will do with the zoning-plan idea.