Is San Francisco’s Vacant Office Space the Answer to the Housing Crisis?

In a groundbreaking paper, researchers from Columbia University and New York University have shed light on the untapped potential of San Francisco’s downtown office space for residential conversions. According to the report, around 9% of the core business district’s office inventory, equivalent to over 5.2 million square feet, may be viable for turning into housing units. The study took into consideration various factors such as the age and size of the buildings, revealing that most of the suitable candidates were built before 1940. This insight could be particularly significant for the San Francisco real estate market, which is dealing with a 26.6% total vacancy rate in its core business district, according to real estate firm JLL.

However, there seems to be reluctance within San Francisco’s commercial real estate industry to actively pursue these conversions. While the math behind conversions could make financial sense in a city known for its exorbitant apartment rents, the industry views conversions as complex and often as costly as new construction. This comes despite recent legislative moves to make the process easier; in June, the San Francisco Board of Supervisors unanimously passed a package aimed at facilitating the conversion of commercial properties into residential spaces.

Yet, there’s a glimmer of hope. The paper argues that various policy levers could make these conversions more feasible, including zoning adjustments and government grants aimed at transforming obsolete office buildings into eco-friendly residential spaces. Additionally, San Francisco’s elected leadership is pushing for these changes, signaling a city-wide interest in revitalizing empty downtown areas. Even with just one official application submitted for an office-to-residential conversion, the groundwork laid by both academia and government suggests that we could be on the cusp of a transformative moment in San Francisco’s housing landscape.

Disclaimer: This blog post is a summary of an article originally published in San Francisco Business Times. The full citation can be found at the end of this post.

Klearman, S. (2023, September 12). “San Francisco’s downtown is full of viable candidates for office to residential conversions, new paper suggests.” San Francisco Business Times. Full Article