Activating Vitality in the Housing Sector

The Summer 2025 Survey indicates that multifamily sentiment continues to be on a positive trajectory, and developers are looking more seriously at redeveloping office space into multifamily units. Yet, California’s housing shortage is an inescapable reality for many residents. Shawn Gehle, co-founder and principal of architecture firm Office Untitled, talks through the opportunities and the latest trends in the sector with Allen Matkins Partner Spencer B. Kallick.

Spencer B. Kallick

We’re clearly in a changing environment, but what trends do you see? What is the next innovation that you are looking at, either to make projects pencil or to make projects even more architecturally interesting or perhaps both?

Shawn Gehle

There are some things locally that are going to gain real traction and move pretty fast. I would argue that we are now at the point where the availability and vacancy of office buildings to be converted into something other than office buildings is making a lot of sense. You look at everything from the Standard hotel, which used to be an office building to several apartment buildings in downtown LA, all throughout the city, and nationally, there's always been a trend to convert office buildings to some other use. It's just that the trend hasn’t yet hyper-accelerated.

You have great buildings that do exist that have the potential to have a life beyond the original use case. I think that's a huge opportunity. There is just a point of financial capitulation that kicks in. It's the point where the bones of the building are what is salvageable. You're not trying to reconstitute it in its original form, which means you can effectively get rid of some stuff and not feel like you're burdened by it. Then, we’re going to need legislative and financial mechanisms that support conversions. Financial stacks historically haven't really supported vertically segregated uses in buildings. You see this in Japan, you see it all over the world, where you can put a hotel on top of a restaurant, on top of some residential, maybe you slide in a data center, and you do something else in the middle of it, and that allows you to have true mixed use and true diversity of income streams. Unfortunately, the capital stacks historically in the United States haven't supported that.

SBK

Alright, so we've got office to residential conversion. What other trends are you seeing? What about projects that incorporate prefab or mass timber?

SG

Here in California, and certainly in LA, we have some hurdles to get over relative to the number of manufacturers that provide the materials, and the city's willingness to allow a variety of manufacturers to provide that supply. When you have very few manufacturers doing mass wood, it makes the cost of it quite prohibitive. Right now, I think one of the biggest coming trends is the impact of the need for wood supply in response to the Altadena and Palisades fires. How will the wood supply reconcile single-family rebuilds with the next generation of multifamily construction?

SBK

Because so much wood will be required for the rebuilding of these single-family homes, there's not enough wood to build what we would call traditionally five-over-two-stick frame construction. As a result, some sort of innovation needs to be created with cement, steel, and maybe some other new materials that we're not even aware of yet.

SG

The innovation could come from a new material, but it could just come from the fact that supply will be impacted by the amount of single-family rebuilding and residential building in general. A lot of that building is going to happen with wood, and the response may be that concrete or steel buildings could become the new norm. To bring in those new materials, it would have to be a much more competitive landscape to push it through.

SBK

Let’s talk more about housing. We have a huge housing crisis here in California. What's it going to take to solve that housing crisis and what is your firm’s role in that equation?

SG

Well, my answer is that I am cognizant of where we sit in the stream of decisions that are necessary to solve the housing crisis, but ULA (known as the Mansion Tax in Los Angeles) has made it really difficult.

ULA has effectively stopped developments from happening. And you see this in the city's projections of revenue. You see this in the number of deals. You see this in the number of permits being pulled. It has had a series of consequences. What I would say in general is that the city, state, and communities in general need to find a way to activate vitality back into our cities. We need to get people back together outside in places in the community. We need to make sure that work is built around that, as well as recreation. There's a lot of infrastructure here that's come to the end of its life cycle and needs to be invested in. We need to figure out how to activate that kind of growth.