TITLE
Recommendation to direct City Manager and the Department of Development Services to work with the Downtown Long Beach Alliance and community stakeholders to establish incentives and strategies to address commercial vacancies in Downtown Long Beach and to better utilize vacant office space for housing and creative space, including;
- Tax incentives to convert vacant office space into housing;
- Zoning changes, if necessary to facilitate such conversions;
- Working with the State of California regarding their new Adaptive
Reuse fund;
- A dedicated homelessness outreach plan for Downtown,
including increased coordination between the Downtown Long
Beach Alliance and City homeless services providers;
- Tax and fee holidays to attract new businesses into downtown
commercial vacancies; and
- Other strategies and incentives designed to increase tenancy
and enhance vibrancy in the Downtown community.
DISCUSSION
The Problem
According to the Downtown Long Beach Alliance’s Q2 Snapshot of the office real estate market, 22.4% of Downtown’s office space is currently sitting vacant, up from just 13.5% in 2019, before the COVID-19 pandemic.1 The Long Beach Business Journal reports that this number is the highest in 20 years.2 The trend of office vacancy looks likely to continue, at least in the short run, as 16% of Downtown businesses report an intent to reduce their office space before the end of the year, while just 7% report an intent to add new office space.
However, measuring the situation in Downtown office buildings by vacancy rate may significantly understate the problem, as office utilization, a measure of office spaces currently rented out but not currently used as a workspace, shows that 58% of the Greater Los Angeles Area’s rented office space is currently unused, up from just 2% pre-pandemic. Assuming Long Beach follows similar trends, its “real” office vacancy rate may be closer to 67.4%, if offices which are rented but unused are also ...
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