With San Francisco required by the state to produce 82,000 units of housing over the next eight years, it remains to be seen how city leaders will be able to meet that obligation. One idea gaining traction is to convert empty office buildings downtown to housing developments.
Work-from-home policies and routines brought on by the COVID pandemic have resulted in a hollowing out of the business sector in the city's economic core. Some estimates predict that the city's office vacancy rate is soon to surpass 50% in certain neighborhoods.
In June, the city's chief economist Ted Egan, Ph.D., released a report looking at the economic context for development in the city post-COVID. By 2024 he predicted the office vacancy rate for the Financial District north of Market Street could be 41.4% and south of Market Street it could hit 34.2%.
Union Square could have a vacancy rate of 28.2%, reported Egan. Along the Mid-Market corridor, it could rise to 43.4%, according to his report.
Already, more than 25 million square feet of commercial space is available for lease or sublease in the city, which the San Francisco Standard news site earlier this month noted was "the equivalent of about 35 Transamerica Pyramids sitting empty."
Thus, talk has increasingly turned to transforming those floors of vacant office cubicles into apartments and condos for new downtown residents. A number of candidates running in this year's supervisor races voiced support for doing so in Bay Area Reporter editorial board meetings and questionnaires.
As he works to bring in-fill developments to his Sunset District, as well as to encourage owners of single-family homes in the city's western neighborhoods to build additional housing units in their buildings or backyards, District 4 Supervisor Gordon Mar told the B.A.R. that converting unused commercial office space downtown into housing should be part of the solution toward meeting the city's housing needs.
"We need to acknowledge that the downtown area will be forever changed by the COVID pandemic and the shift to remote and hybrid work by core office employers who fueled the downtown economy in recent years," said Mar. "In reimagining our downtown area for the post-pandemic period, I believe we have an opportunity to think creatively and boldly. One key idea that I support is repurposing vacant office space and revising new office developments in the pipeline to social uses including market rate and affordable housing, cultural centers and nonprofit and community spaces."
Doing so will have a beneficial spillover effect for the restaurants and other service businesses located downtown that are struggling from the decrease in daytime workers commuting into the city.
"Adding mixed income housing and cultural/community facilities to the downtown area will bring more economically and socially diverse people back to the area supporting small businesses and other commercial activities," said Mar.
Joel Engardio, the gay former journalist turned neighborhood organizer running against Mar, agrees that San Francisco "must reimagine" its downtown district. He, too, believes more housing should be built there.
"There is no going back to the 1990s-era version of downtown that existed before the pandemic. The way people work and live has changed and we must use that as an opportunity to reinvent our urban centers," said Engardio. "We should re-purpose office buildings into housing and create experiences that draw people downtown and into the streets beyond a 9-to-5 commute pattern."
He also supports closing some downtown streets in order to repurpose them into dining and entertainment promenades.
"This is the time to encourage innovators and entrepreneurs," said Engardio. "City Hall must let every idea have a chance to be the one that saves our local economy."
Gay District 8 Supervisor Rafael Mandelman, who is running for reelection, told the B.A.R. that the city needs "to support building owners in converting buildings that no longer work for office space to other uses or facilitate the upgrading of those buildings to more modern office space."
Kate Stoia, a lawyer and straight married mother running against Mandelman, expressed support for "the creation of housing and/or performance spaces for artists in buildings that were formerly office space only" as a way to revitalize downtown.
District 6 supervisor candidate Honey Mahogany, formerly chief of staff to Matt Haney when he held the seat, has also voiced support for adding more residential units to the city's downtown core. If elected as the city's first transgender supervisor, Mahogany would represent the South of Market neighborhood and its East Cut district where numerous office buildings and new housing towers have been built.
"Our downtown has struggled throughout the years and traditionally has been a ghost town at night," said Mahogany.
With San Francisco one of the slowest cities to recover from the pandemic, Mahogany noted that "the impact of empty offices and slow return of tourism on our city's economy is going to be devastating if we don't get people back to San Francisco. We also have to face the reality that many companies have adopted fully remote or hybrid work models and downtown won't be the same as before the pandemic."
Those trends require "creative solutions," argued Mahogany, for how to reactivate downtown.
"We also have to look for opportunities to build more housing and convert office spaces into housing," she said. "We can build communities directly in downtown, bringing people and business to not only open, but thrive."
Gay District 6 Supervisor Matt Dorsey, appointed to fill the vacancy created when Haney departed in the spring for the state Assembly, also told the B.A.R. "as the future of downtown changes, everything should be on the table."
Challenges
But Dorsey cautioned that turning vacant offices into residential units comes with challenges. In talking to housing advocates and others, Dorsey noted he has been advised there are "obstacles to this in making them residential buildings that are code compliant."
How feasible a solution it is to convert former office buildings into housing remains up for debate. Some argue it doesn't make financial sense, as the build-out for such projects can be more expensive than the cost of constructing a new residential building.
Current economic conditions, from rising interest rates to supply issues, are also negatively impacting construction projects in the city. Egan predicted a coming slowdown in housing construction in his report this summer.
"Rising interest rates means the housing market may also be reaching a peak. A further cooling of development can be expected in the months ahead," he wrote.
The supervisor candidates acknowledged the expense of office conversion projects could be cost prohibitive to undertake. Nonetheless, they argued such reuse of commercial buildings must be part of the conversations around how to increase the city's housing stock.
"Some developers may think it is impossible, while others can make it work," said Mahogany. "I am excited to talk to more people who think more positively about this and may have some solutions we haven't heard of yet."
Dorsey also told the B.A.R. it is an idea that shouldn't be outright discarded.
"There is a model for it," he said. "I don't think we should categorically say yes or no. It is something we should have on the table."
Mar acknowledged, "I am not sure about the feasibility. I have also heard it is not easy to do." But he told the B.A.R., "I think the concept of converting some of the commercial space downtown to housing makes a lot of sense."
Web Extra: For more queer political news, be sure to check http://www.ebar.com Monday mornings for Political Notes, the notebook's online companion. This week's column reported on a Long Island congressional race pitting two out candidates against each other, which is a first for a general election ballot.
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