“San Francisco’s downtown has lost roughly 150,000 daily workers since the pandemic,” reports the San Francisco Chronicle.
But on the bright side, “Some of San Francisco’s empty office buildings are one step closer to being converted into residential units,” reports SFGate:
The owners of eight San Francisco office buildings responded to a request from the city for landlords interested in converting their properties into condos or apartments, the San Francisco Chronicle reported… The properties would yield about 1,100 units if they were to all be converted, according to the Chronicle. All of the buildings are located in neighborhoods downtown, including the Civic Center area and the Financial District…
Converting offices to housing is a notably difficult process, especially in San Francisco, where the city’s tedious permitting and approvals process has deterred many landlords from pursuing the process entirely. However, that could soon change: The request for interest put forth by the city was part of an initiative intended to jump-start office-to-housing conversions that was announced in June. In March, Mayor London Breed and the Board of Supervisors introduced legislation that would facilitate these conversions by exempting certain downtown buildings from housing requirements that are more difficult to apply to former offices, like rear yard space and a variety of unit types.
Or, as the Chronicle puts it, “The much-discussed push to revive downtown San Francisco by converting empty office buildings to housing is starting to gather real-world momentum, with property owners looking to take advantage of a political climate in which the mayor and Board of Supervisors are desperate to activate the city’s struggling central neighborhoods.”
While converting eight commercial buildings totaling less than 1 million square feet would not put much of a dent in the historic 33.9% office vacancy — more than 30 million square feet of space — the interest is indicative that an increasing number of landlords are accepting the reality that the pandemic and remote work has rendered some buildings obsolete. “We were pleased with the responses — it was more than we had expected, and there was a good variety of buildings,” said Anne Taupier, director of development for the city’s Office of Economic and Workforce Development. “We think there is a chance to see some game-changing activation….”
Taupier said that all of the property owners said that recent legislation streamlining and lowering affordable housing requirements would be key to making conversions possible. Most of them would be candidates for Mills Act tax credits, which allow cities to reduce taxes for 10 years or more to owners of historic properties.
One of the biggest applications came from Mark Shkolnikov’s Group I. “The support from the city has just been remarkable,” Shkolnikov said. “They have been frequently checking in to see what they can do to help move this along.