SoCal developers dig into oil sites for redevelopment

"Southern California developers are increasingly striking deals on land once used for oil extraction. Oil drilling sites across Los Angeles are being reclaimed for commercial real estate development as the City and County of Los Angeles move to phase out drilling, Commercial Observer reported. As it stands, there are 68 named oil fields and thousands of wells across the city. Those parcels are becoming redevelopment targets as buildable land is scarce and prices are climbing, making former oil and refinery sites attractive in both scale and price."

"They all come with different constraints of different types and different challenges. We like to say, There's some hair on this deal.' Sometimes the hair is of a cleanup nature. There's something that needs to be cleaned up before it can be properly reused, Preston Brooks, a real estate attorney dealing with contaminated properties for real estate law firm Cox, Castle & Nicholson, told Commercial Observer. Sometimes it's going to be these wells. But there's such a strong appetite for acquiring properties that are otherwise good real estate."

"Investors from nonprofits to national REITs are lining up. The Los Angeles Neighborhood Land Trust, for example, is converting a 2-acre site in South L.A. site with 36 decommissioned wells into a park, community center and affordable housing. It purchased the property from Sentinel Peak Resources in 2023 for about $10 million. This project actually came to us from the community, executive director Tori Kjer said. There was just this coexistence of two land uses that don't work well together."

Developers are converting former oil drilling and refinery parcels across Los Angeles into commercial, residential, and community projects as buildable land becomes scarce and land prices rise. The city contains 68 named oil fields and thousands of wells, creating large redevelopment opportunities but also environmental cleanup and regulatory hurdles. Projects face contamination issues, decommissioned wells, lengthy approvals, and remediation costs that can delay reuse. Investors range from nonprofits to national REITs pursuing parks, affordable housing, mixed-use developments, and hotels. Community-driven acquisitions and partnerships are emerging as one pathway to repurpose these brownfield sites.

Read at therealdeal.com