Sell or Retrofit?
LA landlords are opting to sell over retrofit while hospital closes, and lays off all 638 employees
The county of Los Angeles may have gotten away in comparison to the East Coast this year, however one natural disaster will continue to keep homeowners/landlords sleeping with one eye open.
Property owners are now facing the tough decision between selling their buildings or undergoing a timely and costly retrofit for older apartment buildings according to CoStar.
Now maybe the time to take advantage of the rising market and sell properties for property owners. This is becoming a popular movement, city officials released a list of 13,500 properties that needed to undergo retrofitting. Roughly 3,000 owners have started the process with now more than 300 buildings completed.
Recently, the hospital that has provided service for the last 150 years, has now closed its door on Nov. 30. Pacific Alliance Medical Center in Los Angeles had planned to originally close on Dec. 11, however, the early closure was due to the lack of funds to support the cost of retrofitting its facilities to meet California’s seismic standards.
“PAMC does not own the land on which our hospital sits, and the owner is unwilling to sell the land to us,” the hospital said in a statement to Becker’s Hospital Review in October. “The hospital building does not meet current California seismic standards, and it is not economically viable for us to invest nearly $100 million to build a hospital on land that we would not own.”
Prior to its closing date, a California Worker Adjustment and Retraining Notification Act was released Oct. 9 noting that 638 of the hospital’s employees would be laid off. That number was confirmed by the hospital upon closure.
The city ordinance orders the retrofit of wood framed buildings older than 1978. Many are faced with the cost of retrofitting, not to mention the cost of construction and expenses accumulated for tenant relocation may be too compromising for a few.
The Pacific Alliance Medical Center chose not to renew its lease considering the state law would require close to an estimated $100 million renovation by 2030. PAMC also sits on a lot not owned by them and has posed a lost of $53 million and $44 million in 2015 and 2016 within the last few years.
Property owners and landlords have chosen to not undergo a retrofit due to various implications that involve much more than the retrofitting process itself.