Nearly one in 10 offices in Downtown San Francisco could be converted into housing.
That’s the conclusion of researchers at Columbia and New York universities, whose study says 9 percent of the city’s Downtown offices could be turned into homes, the San Francisco Business Times reported.
Authors Arpit Gupta, Candy Martinez and Stign Van Niewerburgh identified 140 buildings across the city for which residential conversion could make financial sense.
Of those, 47 buildings with 5.2 million square feet of offices in Downtown could be converted into homes. The city’s core business district contains 58.7 million square feet of offices, according to the Business Journal.
The office-to-home conversion candidates within the core business district range from 600,000 square feet to 25,000 square feet. While the bulk of the candidates were built before 1940, the newest office building was built in 1988 at 222 Front Street.
The academic paper includes some office properties unlikely to make the switch to housing, such as the Transamerica Pyramid.
The researchers say such conversions could help revitalize cities such as San Francisco, whose empty Downtown could damage the financial health of the city.
Offices within the city’s Downtown core had a 26.6 percent vacancy rate in the second quarter, according to JLL. Other estimates put the rate of empty offices at 33 percent.
Commercial landlords in San Francisco, however, haven’t embraced office-to-home conversions. Despite public interest in replacing empty office buildings with much-needed housing, conversions can be complex, and cost just as much or more than new construction.
Apartment rents in San Francisco have historically been high enough that the math behind conversions could work, the paper’s authors say.
They point to local, state or federal policy changes that could help get residential conversions built. These include zoning adjustments, tax abatements, debt subsidies and government grants to help developers turn obsolete office buildings into more environmentally-friendly housing.
Developer interest has been limited, according to the Business Times.
Just one application for a major office-to-home conversion has been filed with the city. A developer had planned to convert 40 units at 988 Market Street. But when the Business Times revisited the application, it was marked “on hold.”
Any actual conversions spurred by the high vacancies and recent push to lower zoning regulations and fees are likely years away, analysts told The Real Deal, and will require a collective effort from government and developers to make the projects pencil.
— Dana Bartholomew