Can declining commercial real estate demand help address California’s housing crisis?


A decline in commercial real estate demand could represent an opportunity to reallocate portions toward more affordable housing in California.
The COVID-19 pandemic has led to an estimated 175,000 business closures this spring, and the delinquency rate on commercial-mortgage-backed-securities has increased more than fivefold in recent months.

According to a recent RAND survey, an estimated 40% of those remaining employed are working from home full-time, and employers are signaling that this may become the new normal.

All of this suggests a significant decline in commercial real estate demand. This could be regarded as yet another negative economic effect of the pandemic, but it could also represent a once-in-a-lifetime opportunity to reallocate portions of the built environment away from declining commercial demand and toward the urgent demand for affordable housing.

Attempts to "upzone" areas zoned for single-family use – a designation covering 75% of residential land in Los Angeles –  have repeatedly failed in the Legislature. One of the few bright spots in housing policy has been the city's 20-year-old "adaptive reuse" program, which played an important role in the creation of more than 14,000 new housing units in downtown Los Angeles, as well as in other parts of the city.

 



Sincerely 

Richard Murillo
Murillo Real Estate LLC.
(323) 209-8510 call or text 


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