Sule Aygoren Carranza is managing editor of Real Estate Forum and editor of Multi Housing forum, from which this article is excerpted.

Los Angeles—Changing demographics and development trends are reshaping the nation's downtowns, including Los Angeles and other California cities. More people are opting to live in urban centers rather than suburbs. Developers are following suit, building more communities in CBDs.

The trend is being fueled by several factors, says Delores A. Conway, director of the Casden Real Estate Economics Forecast at the Lusk Center for Real Estate at the University of Southern California here. In places like Los Angeles and Oakland, CA, developers are transforming vacant industrial buildings to residential lofts and marketing them for both rent and sale.

"The key point is that the space was available," Conway tells Multi-Housing Forum. "Adaptive reuse regulations were also put into effect, which is what spurred a lot of development in Downtown Los Angeles. That explains the supply side. Developers saw opportunities to do infill development of condominiums and rental apartments because the space was available, whereas land is incredibly scarce right now in Los Angeles, particularly for the largest developments. And then of course, the propensity is to build vertically, with higher densities, so multifamily is a natural fit."