August 30, 1994 - From the August, 1994 issue

Rethinking the Future of Our Urban Downtowns: An Opportunity in Need of Study

Nearly 11 million square feet of new office space has to be created by 2010 in downtown — or does it? A senior associate of a workplace consulting firm and former director of Comprehensive Planning for the city of New York, Michael Pittas presents new work office trends that will potentially reduce use of traditional office space. Mr. Pittas proposes various re-use options of office space, such as housing, hotel, or educational space. 

The published 2010 forecast for downtown L.A.'s core business district predicts an increase in the pre­dominantly white collar work force from 215,000 to 250,000. To accommodate this anticipated increase, nearly 11 million square feet of new office space will need to be created. One supposes that such an outcome would greatly please the real estate industry which could look forward to filling the 18 percent vacancy rate in downtown office space. There's enough land potential to accommodate such an expansion despite some obvious and continuing negative impacts on commuters, air quality and strain on public infrastructure. We'd think something was seriously amiss if downtown L.A. didn't grow a dozen new office buildings by 2010. After all, the future of any successful central business area is plotted in the visible manifestation of its changing skyline. 

What would happen if instead of increases in white collar jobs in the core, there were major declines? Decline in demand affecting rental office space in the order of 50 percent or more of what presently exists. Impossible or quite probable? As one publication put it, this is the "hidden" future vacancy factor confronting L.A.'s downtown. What could cause such an outcome? Several clearly apparent factors emerge: 

1) Corporate downsizing has had a dramatic impact on office space demand. Over 600,000 workers, (mostly white collar) were eliminated from corporate payrolls in North America in 1993; 2) Re-engineering of corporate organizations to become even leaner and meaner is bringing per worker office space down from 270 Square Feet to 120 Square Feet (a 40 percent reduction in space utilization); 3) New work place concepts like Hoteling, temporal offices, and shared work spaces are radically changing the work place and dramatically reducing space needs for many large tenants. By employing the concept of Hoteling, Ernest & Young's "Chicago office was able to reduce its audit divisions' dedicated private offices from 500 to 100 and yet assure a private office to anybody on any given day."; 4) Telecommuting - the home office, the office at your clients, the office on the road, the virtual office, but not the downtown office, will be the most significant factor effecting the future of downtown office space. At the moment, telecommuting appears to be a work "option" utilized by less than 5 percent of all information workers. This trend is expected to accelerate its growth rate by over 20 percent each year for the foreseeable future as large corporations "mandate" workers perform their responsibilities outside the traditional office setting. The result, the elimination of a majority of dedicated offices and work stations. For example, Xerox has just implemented the first phase of a company-wide telecommuting strategy by requiring 5,000 employees to work from home. 

More than ever before, corporations are providing their employees with sophisticated Power Books with FAX modems, access to special networks, printers and scanners. Some provide no more than a cellular phone and a FAX machine. The downtown office still exists as a management, and support services center, but with almost no private office space. While the corporate culture is maintained by required marketing, training, and group­think activities which occur as a once-a-week or bi-weekly daylong meetings downtown or thru video conferencing at regional telework centers. Telecommuting will probably have the most drastic impact on the reduction of office space.

Thus, one can seriously contemplate a progressive unremitting emptying of downtown without being labeled a nattering "Nabob" of negativity. Of course, many view such a future as apocalyptic and envision future downtown L.A. as a deserted wasteland of empty towers, a testimony to the public and private overbuilding folly of the 80's. 

However, there may be a more constructive way to conceptualize such a future by asking the question: To what purpose could the modern high-rise, hermetically sealed glass and granite office building be put to, if not for offices? Donald Trump thinks he has an answer. He's converting New York City's 44-story Gulf + Western building to luxury housing. Conversion of downtown L.A.' s class A and trophy office buildings should be given serious consideration, looking at the economic, legal, architectural and engineering issues implied by such a course of action. Whether conversions would fill upper-end demand or moderate income, or affordable housing needs matters little when considering the architectural and engineering issues of retrofitting. For example, the floor plates of typical office buildings can have a distance of 35 to 45 feet from the perimeter window wall to the elevator core. A dimension which is not uncommon for the thinner profiles of contemporary high-rise housing. Nobody likes to waste space. Everyone talks about the virtues of mixed-use development; well here's an opportunity -mixed­use on the same floor-say, apartments with work spaces, classrooms, shops, etc. Or what happens when the hermetically sealed office structure is stripped of its skin and replaced by operable windows (and flower pots!), balconies and perimeter circulation? Another possible solution for wasted space. 

Modern office buildings built with stronger structural standards, higher floor-to-ceiling dimensions than apartments, and minimal vertical obstruction, along with superior elevator systems, presents an intriguing canvass on which to paint the architecture of a new housing type. 

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Housing is not, of course, the only option in need of exploration. Similar physical reconfigurations could be used to create downtown "towers of learning." These could be university extensions with student housing lining the perimeter of large floor plates with classrooms built at the interior. In a similar vein, a teaching hospital with intern housing might be appropriate for certain building configurations. Or because of proximity to major entertainment, conventions and cultural uses, some office buildings might become hotels. One re-use which would not involve much physical alteration would be vertical "Silicon Valleys," that is, laboratories in which "pink collar" workers assemble the new micro­technology miracles in sealed, air­conditioned space, not unlike office space. 

Some office towers might be converted to housing only on the lower floors, reserving view floors for corporate headquarters. Floors dedicated to recreation entertainment as well as education and day care might occur intermittently. 

Imagine then a downtown L.A. in 2010. An urban center which has truly become a 24-hour place with all the rich diversity associated with an historic understanding of Central City-work place, center of government, cultural center, central market place and place of diverse residence - a new downtown which has converted 50 percent of its 37,000,000 sq. ft. of office space to over 18,000 units of new housing as well as other commercial, educational and support activities not now available downtown. A center core where a radial subway system serves as many out­bound as inbound riders. A place where freeway usage is way down and with it cleaner air and less public capital investments in roads and maintenance. Also a downtown which, from a distance would have appeared to have stopped in time - no new buildings, but on closer examination, not a deserted apocalypse, but a testimony to human ingenuity.

Without doubt, the scenario painted here may prove to be rosy. Public policy makers, the real estate industry, developers and leaders alike have an enormous investment in seeing that the four decades of downtown office expansion continue. Many will choose to believe that the much-anticipated boom cycle is just around the corner despite the longer than expected decline in demand and lack of projects in the pipeline. Inertia may rule the day, but abandoning the multi-billion dollar investment in public infrastructure and private building, (not to mention a new fixed-rail transit system rationalized on expanding trip generation to downtown) is almost impossible to imagine. 

It should be evident that if this author's forecasts are even mildly correct, large economic dislocations may occur with rapid devaluation of the central core areas' office stock; an outcome that will not only effect owners, but also public revenues. Among the factors in need of study to enable conversions: 1) Significant changes to zoning, building, housing, fire safety and health codes; 2) Construction financing and long term take-outs will need to be identified; 3) Tax incentives and public subsidies may need exploration; 4) New health, social services and education resources will be needed to support a tripling of downtown's residential population; 5) Attitude issues about dense high-rise housing may also need to be overcome for those who have real choice in housing; and 6) Issues of social balance and enhanced economic opportunity will need to be thoroughly explored.

An enlightened process of strategic planning needs to be undertaken to confront these issues squarely. At the minimum, an open dialogue needs to take place free of the leaden inertia of fixed attitudes. To ignore the rapidly changing nature of work and work place would be fatal. To fail to see it as an opportunity would be foolish.

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