They raised the existing structure, then carved out and excavated for a new foundation that now serves as a mechanical room, storage and workshop for the owner. The dirt from the foundation was used to create new landscaped terraces.
A little cozy up in the loft area but something has to give when you're working with 320 square feet.
I like the use of all the wood from floor to ceiling and the contrast of the high gloss in the ceiling to the dull matte of the floors. And that is a structural steel column in the middle of the kitchen. Just throw some pots and pans on it and call it a pot rack. Sweet improvising.
Check out the architects, SHED here
Photos via Remodelista