As Excitement Builds for Turning Office Buildings Into Homes, Questions of Feasibility Arise
By Robert Fulton | contributing writer
With a glut of empty office space in the heart of San Francisco — a city suffering from a desperate housing shortage — a conversation is emerging about a solution that seems logical: Let’s convert some of that unused commercial square footage into much-needed homes for human beings.
“It could change the whole environment,” said Oz Erickson, principal, chairman, and founder of SF-based residential developer Emerald Fund. “Long-term, it greatly benefits the City.”
Erikson said that the City today plays host to approximately 30 million square feet of empty office space. Following a huge boom in office construction in the late 2010s came the paradigm-shifting global Covid pandemic in March 2020, and that commercial building boom went bust nearly overnight.
Then, state and local stay-at-home orders combined with the work-from-home phenomenon to empty out downtown office towers, many of which now remain vacant. The City’s tax base has taken a significant hit. Meanwhile, its struggle to meet housing demand persists.
Office-to-housing conversions have emerged as a potential solution, and they seem to be gaining traction as a concept among politicians, developers, and building trades workers. But these conversions can be time-consuming, expensive, and complex — in other words, easier said than done.
Under the right circumstances and with some regulatory tweaking, however, conversions might just be a viable way to construct much-needed residential units, beginning in the dense heart of downtown San Francisco.
What 100 Van Ness Did Right
How about a test case? Let’s look at 100 Van Ness Avenue.
Erickson’s Emerald Fund partnered in converting the 28-story, 500,000-square-foot building into 418 residential apartments in 2015. Numerous characteristics gave 100 Van Ness a distinct advantage over similar office structures, including its Civic Center location, a small footprint of 16,000 square feet, centrally located elevators, and panoramic views available to two-thirds of the final units.
Erickson said that the conversion was a complete success.
“We were able to work out the arrangements to make it into an extremely attractive building,” he said.
Erickson estimated that of the 30 million square feet of empty office space in San Francisco, 7 million square feet could be converted into housing for some 15,000 people. It would bring more round-the-clock life downtown, create housing, and benefit the commercial real estate business by slashing empty inventory by nearly 25%, he said. He cited the conversion efforts made in New York City that started in the late 1990s as a positive example.
“I don’t know of a single person who’s not supporting this idea,” Erickson said.
What the Commercial Landlords Say
Of course, conversions can happen only if the owners of these disused office buildings support them, and it seems that some owners do.
The Los Angeles Times reported last September on a handful of successful conversions of disused office towers that had recently been completed along that city’s centrally located Wilshire Boulevard corridor in Koreatown, with more on the way.
When it comes to San Francisco, however, we just don’t know yet how much excitement there is for conversions among the City’s office-space-holding real estate investment trusts. Organized Labor reached out to some prominent SF commercial developers, including Columbia Property Trust, Paramount Group, and Shorenstein, for their input on conversions. None replied, save for Shorenstein, which declined to comment.
On Thursday, June 22, the SF Office of Economic and Workforce Development and the SF Planning Department put out a joint request for interest (RFI) among stakeholders specific to office-to-housing conversions. That presumably means the City is looking to gauge how much enthusiasm exists for conversions among the City’s commercial landlords. Once the results of that RFI become available, Organized Labor will report on them.
What the Trades Say
When it comes down to the practical realities of construction, office-to-residential conversion can be a challenge.
Traditional office spaces designed for working employees need to be transformed into living spaces — think kitchens, bathrooms, and bedrooms. That calls for significant upgrades to electrical, plumbing, and more. Lots of new walls will need to be built, and the reality of office building architecture versus residential architecture means that not all of these conversions will offer the vistas enjoyed by those living at 100 Van Ness. In fact, some residents might not have windows at all.
The City’s building trades leaders are thinking about these hard realities while remaining hopeful that conversion work would bring much-needed jobs to their members. So, consensus regarding conversions appears to be that it’s best to approach with caution and keep the optimism grounded.
Larry Mazzola Jr., business manager and financial secretary of Plumbers and Pipefitters UA Local 38 and president of the SF Building Trades Council, is cautious when considering conversions. With rerouting of drain, waste, and vent pipes necessary for any modification, conversions could provide plenty of work to his local. But one basic concern he raised was that the neighborhoods with office areas being converted won’t offer the amenities that residential communities need, such as grocery stores.
“Of course, I’m in support of anything that gets work for our members, but what I’ve been told from people in City Hall is that they’re not sure how feasible it’s going to be,” Mazzola said. “It’s just not going to work in every single building.”
John Doherty, business manager of IBEW Local 6 and an SF Building Trades Council vice-president, also advised caution regarding conversions. He doesn’t see them as a magic bullet that’ll cure downtown San Francisco’s ills but thinks they might pencil out on a case-by-case basis. He noted that conversions shouldn’t be done at the expense of the viability of downtown, citing, for example, the fact that local transportation systems are designed to funnel people in and out of the area.
Doherty said that his local hasn’t taken a blanket position on the issue.
“Whether you tell us to build a popsicle stick factory or a state-of-the-art medical facility, that’s what we do,” he said. “Targeted, thoughtful repurposing of buildings is not something we’re opposed to.”
What City Hall and Sacramento Are Doing
Other challenges for conversion come at the local and state government levels. The City would likely need to eliminate all exactions — conditional mitigations on developments — and various fees. It might also have to abate taxes to make conversions doable.
If this sounds like a giveaway, it’s not — not according to Erickson, at least.
“It’s not like [the City is] giving up anything,” he said. “They don’t have anything. All they have is a beat-up old building that’s sitting vacant.”
The City appears ready to move forward with these types of abatements to spur conversions: The SF Board of Supervisors approved the Commercial to Residential Adaptive Reuse and Downtown Economic Revitalization ordinance on Tuesday, June 27. On Wednesday, July 5, Mayor London Breed approved the ordinance, which took effect on Friday, August 4.
In Sacramento, former SF Supervisor and current California Assemblymember Matt Haney has proposed Assembly Bill 1532, the Office-to-Housing Conversion Act. AB 1532 would allow conversions “by right,” exempting them from various fees and easing approval. The bill was first introduced in February. A spokesman with Haney’s office said it would be taken up again in the next session, beginning in January.
“It would be a win-win for everybody,” Erickson said of AB 1532. “Labor would get paid. The City would end up with valuable assets. People would be downtown. Office buildings would not be just sitting there vacant.
“It’s not the be-all-end-all solution for downtown, but it’s a partial solution.”