Limited Land Sites Fuels Redevelopment Activity

The limited availability of developable land sites and the high barriers to new ground-up construction in Los Angeles is fueling redevelopment activity in both office and multifamily. Olive Hill Group is focusing its investment dollars this year on redevelopment projects in both asset classes to provide amenity-rich spaces, which they say are in-demand among today’s renters, both in the office and at home.

“Our firm focuses on acquiring office and multifamily properties in core urban areas where we can implement a value-add strategy that caters to the various workstyles of today’s professionals and the various lifestyles of today’s apartment renters,” Tim Lee, principal at Olive Hill Group, tells GlobeSt.com. Since developable land is scarce, and the little of it is that is left is available at a premium, redeveloping properties in this way, especially in emerging markets, is essential.”

The term redevelopment can be broad, ranging from light value-add strategies to total reconstruction. In Olive Hill’s case, the firm is looking to acquire properties in need of a transformation. “Whether it’s a creative build out, co-working space, or value-add transformation for an office property or a renovation and updating of an older apartment property, we have an eye on current workplace and multifamily trends and strive to deliver the most sought-after amenities to the assets we purchase,” says Lee.

In office, the transformation is focused on building open, creative concepts that foster productivity and collaboration in the workspace. This is achieved through design and floorplate configuration. “The majority of office workers are now seeking workplaces that cater to collaboration and creativity,” adds Lee. “The trend is toward large, open floor plans with enclosed rooms for heads-down work and meetings, so we have completed many repositionings that incorporate this preferred model.”

Olive Hill has focused on acquiring low- to mid-rise office buildings in urban markets. These are the properties where Lee sees the strongest demand. “We have noticed a shift in demand, particularly in the West, toward low- and mid-rise office properties that provide easy access to services such as on-site fitness centers, dining options, and outdoor work space,” he says.

In the multifamily market, redevelopment is also focused on creating collaborative group space, like gathering and community space in common areas. “Tenants are looking for gathering spaces and common areas that promote interaction, such as dog runs, outdoor grills and eating areas, and recreation spaces such as putting greens, nature trails, and bocce-ball courts,” says Lee. “It’s important to incorporate these spaces in modern multifamily renovations.”

Location, in general, is important as well. More than amenities, tenants are seeking walkable, livable communities. Location, in general, is important as well. “Both office and multifamily tenants desire spaces in walkable locations, so we’re always seeking out those environments for our investments,” says Lee.