Inside L.A.’s Massive TOC Construction Pipeline
The majority of future multifamily housing in Los Angeles will be within walking distance of a public transit line.
“Measure JJJ was approved in the fall of 2016 and a year later the city launched the Transit Oriented Communities program in 2017,” Chris Benton, SVP at JLL, tells GlobeSt.com. “To qualify for the program, projects must be within a half mile of a major public transit stop and have some level of affordable units. The proximity to transit and the allocation of affordable units determine which tier the project qualifies for. Benefits include increased density and FAR and reductions in parking, open space and lot width requirements. The increases and reductions can make or break a development deal.”
The city’s expansion of public transit lines has also made TOC development more attractive for developers. “Once the Crenshaw/LAX (2019), Purple Line (2023, 2025 and 2026) and the Twenty-Eight by ’28 projects are completed, the vast majority of employment hubs will be within walking distance of a metro stop,” says Benton. “Employers will continue to office along the metro lines, multifamily projects will continue to develop along the metro line and public transit will become that much more prevalent.”
Public transit expansion and transited-oriented projects will be essential in accommodating the new residents moving to the market from major cities.
“Although the city lost an estimated 7,000 residents last year, it continues to attract college-education professionals from New York, Boston, DC and Chicago, per a JLL Research publication,” says Benton. “These residents are moving from transit-oriented markets to a city that essentially requires a car, which on average costs $8,500 a year. This is a major expense these individuals most likely wouldn’t incur in the aforementioned markets. Additionally, early research has shown that Gen Z is delaying getting their drivers licenses significantly. Between public transportation and alternative forms of private transportation, this delay may become more of a permanent shift, furthering the value of a modern public transportation system.”
Los Angeles is experiencing a housing shortage that has put pressure on rents and pushed some residents out of the market. While new housing supply is a necessity, the majority of the new construction is luxury housing. “In 2018, just under one third of the housing units in the city, 8,200 out of 27,000, were filed under the TOC program,” says Benton. “Nearly a third of those 8,200 units were set aside for affordable households. Although a terrific start, there are estimates that the city needs over 500,000 additional affordable units. TOC is a terrific program, but a version of SB 50 will need to be passed before we see significant change.”
This trend is only beginning. The pipeline of TOC project will likely continue to grow, particularly in Los Angeles’ densest markets. “When looking at Greater Los Angeles, there are roughly 6,700 transit-oriented units under construction right now with another 6,600 planned,” says Benton. “Most of these projects are concentrated closer to DTLA, but you’re also seeing developments in places like North Hollywood that are home to tenants who commute to Universal/Studio City, Hollywood and Downtown in under 30 minutes. As the new and extended metro lines come online, you’ll continue to see more and more TOC developments.”