Unlike the backtothelanders from the 60s-70s, the 80s yuppies revered office work and lively downtowns. When the digital world upends the “business district” concept, what’s to follow?
They never lived in that era, but to Gen Z, it’s the 80s all over again, whether it’s artificial tans performed in tanning beds (against scientific advice regarding skin care, aging, or more severe issues), clothing styles, music, and even cars —in Europe, carmakers are bringing back two continent-wide tiny cultural icons, the Renault 5 and the Fiat Panda, respectively.
Over in the US, some car designs reminiscent of the 80s design aura are also popular, albeit bringing more muscle to the equation. The era also seems alive with the revival of the LA-Manhattan connection, from media to real estate.
And, if there’s an iconic city for a moment eager to bring back the colors and angular silhouettes of 80s casual fashion, from shoulder pads to denim jackets, it’s the optimistic, car-centric Los Angeles —like the one portrayed in L.A. Law series’ opening credits sequence.
A Law firm’s office life from the 80s
The series’ opening credits is an 80s masterclass. A close-up of the back of the car gets the trunk slammed shut to reveal a vanity license plate, “LA LAW,” reminding us of a moment in time when aspirational college graduates longed for investment banking and corporate law in Manhattan or Los Angeles, rather than, say, tech or venture capital investment in and around Silicon Valley (or any of its de-facto communities in self-exile).
The credits of L.A. Law follow with a saxophone song, the jazzy, synthesizer-blended melody setting a confident mood while an aerial steady-cam approaches the city’s downtown. The image depicts a fairly clear day in a basin that remained chocked in smog until the early 90s despite the Clean Air Act (approved in 1963, amended in the 70s, and effective in the 80s), or at least limpid-enough to see the relatively low and unassuming skyline of the downtown of those years. At street level, things weren’t so rosy, and the area decayed amid crime and safety concerns (and yes, homelessness was already an issue).
Play the tune, and you get teleported to cities fighting smog, Reaganomics, exuberant stocks (at least before Black Monday in 1987), the fall of the Berlin Wall, and greedy, yuppy anti-heroes —Gordon Gekko (Wall Street, 1987), Patrick Bateman (American Psycho, 1991), Sherman McCoy (The Bonfire of the Vanities, 1987), or John Self (Money, the novel by Martin Amis, 1984). Most of these characters are portrayed in and around Manhattan. However, the movies and music can’t be understood without their production epicenter in Southern California, a mega-city without a “city,” at least to East Coast standards.
The series, one of the many iconic TV productions of its era, aired from 1986 to 1994 on NBC, amassing a total of 172 episodes. It came close to a revival with a proposed sequel, but ABC ultimately rejected the pilot in May 2022. This decision coincided with one of the most significant and enduring impacts of the COVID-19 pandemic in the US: the new rise of “donut cities” or hollowing out of business districts, driven by persistently high office vacancy rates as remote work remained popular despite return-to-office mandates.
A tale of two downtowns
If the series were to proceed and imitate the original opening, it wouldn’t need a costly steady-cam mounted on a helicopter but a mere drone to catch the pulse of a downtown whose transformation has been slower than the one observed in other world cities’ business districts, from Manhattan to London, to even San Francisco —the much smaller, crunchy neighbor to the north.
Though drones flying around LA in search of high-rises would be more interested in portraying one among many secondary downtowns sprouting across the gigantic basin of Greater Los Angeles: on the other side of Santa Monica, the high-rises of Century City have become the epicenter of the entertainment industry as it tries to survive in the era of streaming. There, restaurants are buzzing, buildings remain occupied, and most people are back in the office, albeit in the city’s casual way. There, the Avenue of the Stars leads to the private parking of office buildings occupied by, among others, Creative Artists Agency, as well as boutique banks and specialized law and private equity firms.
When we go to LA, we like to stay at an affordable, outdated, family-friendly motel around a courtyard with a pool in Santa Monica, and we wondered about Century City driving in and out —until we finally visited.
An L.A. Law sequel trying to portray reality would move to the area instead of staying at the Downtown LA high-rises. The situation is very different, about 10 miles to the east. The area is losing tenants, and several office buildings are foreclosing as owners default on their mortgages or sell at a loss due to current vacancy rates.
Brookfield Corp. is the area’s biggest commercial landlord, which is defaulting on loans tied to two office towers. The group’s strategy isn’t new, and they aren’t alone: as high interest rates and half-empty buildings make it impossible to refinance debt or increase income from rent, the cash flow stream won’t support the price they paid for the properties. Angelenos wonder why they can’t do that on their houses if it were convenient.
Not far from the towers that Brookfield Corp. is walking away from, the already infamous Oceanwide Plaza real estate complex began to go up in 2015 and stalled in 2019 when its owner, the Beijing-based developer Oceanwide Holdings, ran out of cash. Since then, the situation has worsened as the Chinese government has disincentivized debt-burdened companies to keep borrowing for adventurous construction projects (and the geopolitical tensions between the two countries have worsened).
A drone flight around Oceanwide Plaza
By the time the project stalled, the Chinese developer had spent $1.1 billion and stated that it would need more than 1.22 billion to finish it. In June 2023, a notice filed in Los Angeles County confirmed that China Oceanwide had defaulted on $157 million it owed to a group of lenders. Oceanwide Plaza is hardly the only bombastic project promoted in California by Chinese companies and investors: since 2011, about $26 billion of direct investment from Chinese firms has arrived in the state.
It is hardly shocking that Oceanwide Plaza was conceived in an impersonal, interchangeable internationalist style that could be dropped anywhere in the world due to its detachment from any vernacular or conceptualization that could have anything to do with LA or Southern California.
The project features three high-rises. The tallest tower was designed to reach 675 feet (205 meters) and 49 floors and was supposed to feature a 184-room Park Hyatt hotel, whereas two additional towers 530 feet tall (161 meters) were planned to have 40 floors and 504 residential condominiums, completed with an 8-story retail area, an amenity high-deck, and dedicated parking space.
In 2019, unpaid work and litigation by creditors prevented the work from resuming (Lendlease, the project’s former contractor, is owed $185 million). When Oceanwide failed to pay its debts in China, the assets were listed for sale in June 2023 as a part of the foreclosure; creditors are expected to take a big cut as there has been little interest in taking over the mega-project, especially as the US accumulates a $557 billion drop in office values, hollowing out central business districts (in May 2024, the company’s liquidators re-listed the towers for sale, to no avail).
As of now, this cluster of unfinished buildings would grab the watchers’ attention of a new L.A. Law opening image flight over the city’s business district. Multiple people have flown drones during the last couple of years to show the surfaces of the unfinished towers covered in graffiti, prominently featuring the work of taggers; shown out of context, the images wouldn’t be associated with LA by many but instead with the convoluted city center of some city from an ailing, unstable country.
Too big to save?
Unlike the Centro Financiero Confinanzas (also known as Torre David), the unfinished skyscraper in Caracas taken over by informal tenants, or its equivalents in Johannesburg (beginning with Ponte City Tower at the turn of the century), the unfinished, graffiti-covered high-rises in LA are not about to establish informal city-buildings as if they were dystopian arcologies straight out of Elysium or Ready Player One. Or perhaps J.G. Ballard’s 1975 novel High-Rise, a brand new building on the outskirts of London that, propelled by the alienation of its solitary, nihilistic tenants, descends into chaos:
“Even the run-down nature of the high-rise was a model of the world into which the future was carrying them, a landscape beyond technology where everything was either derelict or, more ambiguously, recombined in unexpected but more meaningful ways. Laing pondered this — sometimes he found it difficult not to believe that they were living in a future that had already taken place, and was now exhausted.”
High-Rise, Chapter 16, J.G. Ballard (1975)
Is Oceanwide an eyesore that could enter rapid decay and face demolition once its risk is brought to the courts, or is it the biggest opportunity for Los Angeles to reshape its troubled downtown as it has received the Olympic torch from Paris to host the Olympics once again? Are the Olympics just a burden for hosts, or can they become a catalyst to tackle “too big to solve” issues, from homelessness to the hollowing out of the city’s downtown?
Strategically located and including a hotel, condos, apartment rentals, and retail spaces across from the LA Lakers venue (Crypto.com Arena), the Grammy Museum, or South Park’s Convention Center, Oceanwide Plaza has too much potential to become a failed city-within-a-city like Caracas’ Tower of David. In late July, the brokers representing the building’s owners in bankruptcy court were in talks with a Los Angeles developer who remained unidentified and offered to pay $500 million for the ownership. The offer, however, fell through as the unidentified developer “did not meet deadlines.”
“Whoever acquires the property will likely spend an additional $800 million to complete the project largely as designed by China Oceanwide Holdings Group, said Jeff Azuse, executive vice president of Hilco Real Estate. His company, which specializes in bankruptcy sales, is working on behalf of the project’s owner along with Mark Tarczynski, executive vice president at Colliers, a Canadian investment management company.”
An Unfinished Skyscraper Complex Covered With Graffiti Finds a Lifeline, The Wall Street Journal, July 21, 2024
Future inhabitants of Oceanwide Plaza
Mark Tarczynski, one of the brokers in charge of the project’s auction (which will take place on September 17), believes that the size of the development makes it unattainable to all but a few developers:
“It’s 1.7 million square feet of GLA [gross living area] — that’s a large project. The biggest challenge is, only a handful of people can pull it off. Right now, the challenge is, will the city cooperate and be a partner in getting this done before the Olympics?”
Downtown L.A.’s Oceanwide Plaza Project Stalls Again as Stalking Horse Bidder Falls Through, Isabelle Durso, Commercial Observer (July 24, 2024)
Many critics of the state of disrepair of Downtown LA put things in perspective. During our last trip to the city, I talked to a local developer who explained to me that, right before the pandemic hit, DTLA—like locals shorten it—was vibrant, safe, and packed with activities and people, the best it had been in the last decades, though Covid-19 made the area go several steps back, not fully recovering to this day. However, he explained, DTLA feels—even now—safer, cleaner, and more upbeat than in the 80s, when crime and thick smog prevented many from even stepping out of their cars.
The three towers’ current look may be misleading and not likely to last, as creditors and city officials acknowledge that rapid degradation could jeopardize the project if works don’t resume after the bankruptcy auction resolution on September 17.
Earlier in 2024, the City Council billed the bankruptcy executioners $4 million for expenses, including graffiti removal and security reinforcement to ensure public safety, after the buildings appeared even more tagged days before the February 4 Grammy Awards ceremony, held at the nearby Crypto.com Arena; still, graffiti has completely covered the facades since and has yet to be removed. The extra cost of cleanup and reinforcement could have been avoided if the security company responsible for patrolling the site had been offered the $1.3 million in security fees it was owed.
Suzanne Holley, chief executive of a coalition of property owners in the neighborhood, the Downtown Los Angeles Alliance, thinks the current hurdles will be soon forgotten as the demand for housing and hotel rooms keeps rising to pre-pandemic levels, and the future upgrades to get the city ready for several decisive sports events will attract tourism and residential activity to the city core: beginning in 2026, the city is scheduled to host the World Cup, the Super Bowl, and the Olympics.
Residential occupancy has rebounded to about 90%, and demand could have been even higher if rents hadn’t crept up to all-time highs despite fewer jobs and the effect of office workers opting for long-term remote or hybrid work.
A way of building detached from place and actual local needs
Superficial or not, if the current state of the Oceanwide Plaza towers is a symbol of anything, argues the Los Angeles Times, it’s the real estate markets’ failure to tend to the actual housing needs of big US metro areas. In Los Angeles, the City Council has historically favored big projects over the needs of residents, and federal corruption probes have indicted councilmen for accepting payouts, gifts, bribes, and other concealed benefits in exchange for fast-tracking big developments, writes Carolina A. Miranda for Los Angeles Times.
Art Vartabedian argues today in The New York Times that real estate bribes from developers have created an unprecedented situation in California, fostering political corruption across the State. Jose Huizar, a Los Angeles councilmember, just got indicted for accepting sumptuous bribes to ease the approval of big commercial developments; he’s not alone, however: two other members of the LA City Council, Mitchell Englander and Mark Ridley-Thomas, have been recently convicted, and a fourth member, Curren Price, faces similar charges:
“A heavy concentration of power at Los Angeles City Hall, the receding presence of local news media, a population that often tunes out local politics and a growing Democratic supermajority in state government have all helped insulate officeholders from damage, political analysts said.”
How California Became a New Center of Political Corruption, Ralph Vartabedian, The New York Times (August 29, 2024)
If Oceanwide Plaza has turned into a symbol of big real estate corporations detached from the social fabric and needs pre-existent in the places where they choose to operate, the pandemic downturn has exposed their business operations, primarily affecting office buildings but also luxury skyscrapers designed for the few who can afford high rents.
Many people have asserted a paradox: while it’s complex and onerous for American families to default on their real estate loans, corporate entities do so nonchalantly, especially when others (for example, aloof foreign investors and contractors) are the ones taking the toll. The American commercial property market is experimenting with a concealed transformation, as big landlords (Brookfield, Blackstone Inc., Starwood Capital Group, etc.) are walking away from towers built in old downtown environments, affecting foreign investors who have taken most of the losses so far, from South Korea to Germany.
And so, just when younger millennials and zoomers show increasing interest in high-rises near downtowns in thriving cities due to convenience and access to opportunities and amenities, office values in US central business districts have plunged 52% from their peak, according to MSCI Inc. Not surprisingly, the places where young professionals desire to live are correlated with those hosting the business districts registering the biggest price drops: San Francisco, Manhattan, Los Angeles, and the business districts of DC and Boston.
If so, would it be technically feasible and economically viable to transform office towers shed by real estate behemoths and investment funds into apartments? The drop in values has been much smaller in other US markets, but the return to post-pandemic levels of activity and stricter in-person work policies have not prevented central business districts from lagging behind surrounding areas.
Office rents and occupancy have stalled in central districts, which risk entering their own doom loop, as empty storefronts and buildings go hand in hand with safety erosion at the street level. The NY Financial District, Seattle CBC, Dallas CBC, LA Downtown, and Miami Downtown, among others, are lagging behind their safer, newer and gentler outer areas: Plaza South (NYC), Bellevue (Seattle), Uptown (Dallas), Century City (LA), and Brickell (Miami), respectively.
Turning office buildings into apartments
According to David Lipson, head of Savills North America, companies are favoring modern office buildings located in low-crime neighborhoods, where access to parks, amenities and livable, safe streets are guaranteed; in contrast, downtowns maintain high-vacancy rates.
In the years to come, many of these metro areas, among the most dynamic in the US, are likely to maintain their housing affordability crisis. Out-of-reach housing prices are particularly exacerbated in the main California metro areas. A combination of historically low supply, single-family use zoning, and strong job markets in technology, entertainment, and services have attracted a young workforce to Los Angeles and San Francisco that add pressure to prices before they can ease up, thanks to loosened legislation and new supply.
One Los Angeles Times editorial has argued that “Turning office buildings into apartments is how California eases the housing crisis.” Is it viable to rapidly convert commercial properties into apartments, condominiums, and townhomes?
Up until recently, converting so-called “zombie” office buildings into apartment buildings was legally onerous and too time-consuming for any developer to bother, but Assembly Bill 2011 (known as AB 2011), in effect since last year, promises to fast-track approval to build 100% affordable housing on most properties zoned for retail, office, or parking; it also gives expedited approval to projects with a mix of market-rate and affordable housing if they are located on commercial corridors.
According to one analysis by urban designer and planner Peter Calthorpe, underutilized commercial buildings only in Los Angeles County could accommodate 1.6 million housing units. The problem is not only the short supply of market-rate and subsidized housing but also the sheer lack of flexibility and imagination to properly use what’s already built, given the right incentives to all concerned parties.
AB 2011 is beginning to be explored by developers eager to try new ways of increasing housing availability in the areas that big developers have eluded. Jimmy Silverwood, President of Affirmed Housing, a San Diego-based firm specializing in affordable housing (take the adjective “affordable” with a grain of salt, being coastal California), plans to use AB 2011 to develop 200 affordable units on a commercial lot outside Sacramento and is studying to purchase empty shopping centers surrounded by parking lots for conversion.
Not only building more but using better
But, if transforming existing office and retail buildings into apartment units makes sense on paper, adaptive reuse can be as costly as new construction. Gregg Ferry, a reader from Carlsbad, responded to Los Angeles Times editorial Turning office buildings into apartments is how California eases the housing crisis, by demanding caution, so the idea can succeed over the long term:
“I worked in an office that had a floor space of about 10,000 square feet. There were a set of bathrooms on either end. Each cube had one 15-amp electrical outlet, maybe two.
“All that plumbing and electrical work to make the space suitable for housing has to be run. Then there’s the loading considerations of building soundproof walls, adding water heaters and more.
“It’s not exactly a slam-dunk solution to the housing problem. Residential conversion just can’t be done in a lot of office buildings.”
New bills, such as AB 1532, are trying to alleviate the complexities of any costly conversion from office or retail space into housing units by fast-tracking office-to-housing conversions if they include a minimum amount of affordable units.
Adding the approval of apartment buildings near public transit corridors (Senate Bill 375—or SB 375—as well as SB 743, 35, and 50) and the extensive Accessory Dwelling Unit (ADU) legislation allowing people to build secondary units on their property (SB 1069, AB 2299, AB 68, SB 13, AB 670, AB 881, AB 68), the mentality change that California is undergoing regarding housing can’t be underestimated.
However, one big question looms over this effort: will people notice the change and have easier, more affordable access to housing across all segments?