By Tom Elijah

It’s a phenomenon from New York to Dallas to Fresno to Los Angeles that seemed inevitable to some as millions of Californians became the first Americans ordered to work from home to help combat the spread of COVID-19.

This pandemic is not over yet, although the public is fed up with it. Covid’s viral variants are still haunting the world as their third winter of plaguing people begins to wane.

But millions of employees who have had a taste of setting their own hours and creating their own work environment are still reluctant to return to the office more than once or twice a week. As a result, vacant office buildings now cover hundreds of millions of square feet in California alone.

The empty offices made it clear from the first onslaught of the pandemic that housing remodeling would become an important part of the solution to California’s housing crisis, if not its predominant response.

Now that is becoming a reality, the only inexplicable thing about it is the fact that it has taken three full years to go from an obvious concept to a grand reality.

The conversion of office buildings has become so real:

Website rentcafe.com reports that more than 4,130 apartments and condos will be built from office space conversions this year in Los Angeles alone. More than 1,000 new units are planned in Fresno this year, more than 500 more in San Francisco, 450 in Sacramento and about 200 in Oakland. Even cities that have never gotten into this game are now active in remodeling: 372 remodeled units are slated to open in Alameda this year, 250 in San Clemente, and 250 in the San Pedro neighborhood of Los Angeles, not in the announced total of city ​​counted.

A total of at least 10,000 new residential units in former office space will be opened this year.

None of these conversions will be very controversial as they do not occupy new floor space, do not alter existing neighborhood views and profiles, and therefore do not provoke the environmental lawsuits that delay so many California construction projects, including a major addition to the State Capitol.

Surely many more units will follow, especially if this year’s already approved crop brings in significant rents and purchase prices. That’s almost certain, as new units range from street-level apartments, with significant outside noise, to penthouses with sea views.

The number of units running debunks naysayers who claimed, when the idea first surfaced shortly after Gov. Gavin Newsom issued the country’s first home bans in early 2020, that remodeling was more difficult to approve and build than new construction.

That’s not true, especially since the state passed a law last fall that makes such permits virtually automatic when they’re applied for.

Objections that office layouts were wildly different from residential buildings were quickly dispelled as the necessary plumbing and electrical changes, as well as moving drywall within existing interiors, proved less complex than some had anticipated.

Moreover, the conversions are already becoming a fiscal boon for struggling local governments, whose property taxes have begun to fall as office building vacancy rates remain high. Also, as office rental income declined, estimated valuations could control the amount of property tax money going to local schools, sewer and water districts and other local governments.

But if the converted units are sold, they are subject to Proposition 13’s 1 percent tax on the final purchase price of a property. While business tax rates tend to remain relatively stable for decades, residential taxes can rise quickly as units change hands.

At the same time, conversions are beginning to bail out real estate funds, whose office rental income has fallen, as have the dividends they paid investors. All of this happens when former office space finds a new, productive use.

Bottom line: Office remodeling, first recommended by this column in April 2020, is now the wave of the future in California and elsewhere, and it’s a boon for everyone from first-time homebuyers and renters to real estate owners and local governments.

Email Thomas Elias at tdelias@aol.com. His fourth edition book, The Burzynski Breakthrough, The Most Promising Cancer Treatment and the Government’s Campaign to Squelch It, is now available in softcover. For more Elias columns, visit www.californiafocus.net.

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By Tom Elijah

It’s a phenomenon from New York to Dallas to Fresno to Los Angeles that seemed inevitable to some as millions of Californians became the first Americans ordered to work from home to help combat the spread of COVID-19.

This pandemic is not over yet, although the public is fed up with it. Covid’s viral variants are still haunting the world as their third winter of plaguing people begins to wane.

But millions of employees who have had a taste of setting their own hours and creating their own work environment are still reluctant to return to the office more than once or twice a week. As a result, vacant office buildings now cover hundreds of millions of square feet in California alone.

The empty offices made it clear from the first onslaught of the pandemic that housing remodeling would become an important part of the solution to California’s housing crisis, if not its predominant response.

Now that is becoming a reality, the only inexplicable thing about it is the fact that it has taken three full years to go from an obvious concept to a grand reality.

The conversion of office buildings has become so real:

Website rentcafe.com reports that more than 4,130 apartments and condos will be built from office space conversions this year in Los Angeles alone. More than 1,000 new units are planned in Fresno this year, more than 500 more in San Francisco, 450 in Sacramento and about 200 in Oakland. Even cities that have never gotten into this game are now active in remodeling: 372 remodeled units are slated to open in Alameda this year, 250 in San Clemente, and 250 in the San Pedro neighborhood of Los Angeles, not in the announced total of city ​​counted.

A total of at least 10,000 new residential units in former office space will be opened this year.

None of these conversions will be very controversial as they do not occupy new floor space, do not alter existing neighborhood views and profiles, and therefore do not provoke the environmental lawsuits that delay so many California construction projects, including a major addition to the State Capitol.

Surely many more units will follow, especially if this year’s already approved crop brings in significant rents and purchase prices. That’s almost certain, as new units range from street-level apartments, with significant outside noise, to penthouses with sea views.

The number of units running debunks naysayers who claimed, when the idea first surfaced shortly after Gov. Gavin Newsom issued the country’s first home bans in early 2020, that remodeling was more difficult to approve and build than new construction.

That’s not true, especially since the state passed a law last fall that makes such permits virtually automatic when they’re applied for.

Objections that office layouts were wildly different from residential buildings were quickly dispelled as the necessary plumbing and electrical changes, as well as moving drywall within existing interiors, proved less complex than some had anticipated.

Moreover, the conversions are already becoming a fiscal boon for struggling local governments, whose property taxes have begun to fall as office building vacancy rates remain high. Also, as office rental income declined, estimated valuations could control the amount of property tax money going to local schools, sewer and water districts and other local governments.

But if the converted units are sold, they are subject to Proposition 13’s 1 percent tax on the final purchase price of a property. While business tax rates tend to remain relatively stable for decades, residential taxes can rise quickly as units change hands.

At the same time, conversions are beginning to bail out real estate funds, whose office rental income has fallen, as have the dividends they paid investors. All of this happens when former office space finds a new, productive use.

Bottom line: Office remodeling, first recommended by this column in April 2020, is now the wave of the future in California and elsewhere, and it’s a boon for everyone from first-time homebuyers and renters to real estate owners and local governments.

Email Thomas Elias at tdelias@aol.com. His fourth edition book, The Burzynski Breakthrough, The Most Promising Cancer Treatment and the Government’s Campaign to Squelch It, is now available in softcover. For more Elias columns, visit www.californiafocus.net.

The post Column: The Inevitable Conversions Start Multiplying appeared first on DAILY SAN FRANCISCO BAY NEWS.

From Sonja Trauss

SB 9 was signed by Governor Gavin Newsom and is now state law. Will the impact in San Francisco be as bad as opponents predict? Hopefully the answer is yes.

The opponents of SB 9 promise that exclusive, expensive single-family quarters will suddenly be overrun by cheap apartments and the neighborhood will be opened up to every Tom, Dick, Harry, Lisa, Angela, Pamela, Renee, Fatima, Muhammad or Kofi. This wonderful result could become a reality with the support of the San Franciscans on the ground.

The first thing new and exciting about SB 9 is that it is specifically for Single Family Zones (also often referred to as “RH-1 Zones”). Most land use laws, which allow denser, cheaper housing, expressly exclude single-family zones. This is because our land use and zoning laws are primarily concerned with creating and maintaining economic segregation. The requirement that each residential unit be equipped with a large piece of land makes living more expensive.

SB 9, on the other hand, specifically targets single-family homes and says cities must allow maisonettes that are the same size as the largest single-family home in the neighborhood, or at least 1,600 square feet (800 square feet per apartment), whichever is larger.

SB 9 would enable maisonettes in many of the purple lots that are currently designated for single family homes. (Image courtesy Robert Fructman)

Another exciting aspect of this journey to housing production is that maisonettes are being built all over the city, and not just neighborhoods like SoMa, Mission and Bayview. In the past 10 years, a shocking 80% of new homes have been built in just two regulatory districts: Districts 6 and 10, represented by Matt Haney and Shamann Walton, respectively. This means that only 20% of the new residential construction production is spread across the other nine districts. This is clearly unfair and absolutely nothing can justify this injustice.

The passage from SB 9 offers the possibility of a massive increase in residential construction distributed throughout the city, but its implementation can still be sabotaged. SB 9 grants exemptions for individual family areas that are historic districts (and fire zones, but that doesn’t affect San Francisco). Local housing opponents, both inside and outside the local government, will seek to use this exemption and existing procedures to tackle, delay and discourage the big houses in their leafy, exclusive neighborhoods from becoming maisonettes.

You can help with housing construction by joining a local YIMBY group like SFYIMBY or just being careful of what is happening in your neighborhood. When the opportunity arises, speak to you about an apartment. Post in the comments on Nextdoor that, no, you don’t think a new planned maisonette is going to ruin the neighborhood. Click on everyone on your neighborhood list and say that you think San Francisco needs more housing of all kinds and that no, we shouldn’t be organizing to stop a local housing offer. Write your supervisor an e-mail and let him know that you like SB 9, that you want it to be implemented quickly and that you are looking forward to more apartments in your neighborhood.

These messages are really important. Most of the voices in the housing debate support a reason why housing should not be built. We need voices that say YES.

Sonja Trauss is the managing director and co-founder of Yes In My Back Yard.

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