San Francisco adds incentives for office to housing conversions

In short: San Francisco is trying again to turn empty downtown offices into homes by offering new financial incentives, but it still has not completed a conversion.

What's going on

San Francisco has not finished an office to housing conversion in about a decade, according to recent reporting. Several projects have been proposed, but proposals and approvals are not the same as completed apartments that people can move into.

To push more projects forward, the city has added incentives that aim to make the math work for developers. Under a new program, some qualifying projects can get a share of property tax revenue for 30 years. The city has also lowered the transfer tax on certain sales, loosened some requirements, and exempted eligible projects from affordable housing obligations.

A few projects are now in the pipeline. Reports say three developers have proposed projects under the new program, and other proposals include a former Nordstrom Rack at 901 Market Street, a building at 2300 Stockton Street, and an office building at 150 Hayes Street planned for 104 rental apartments. Even with these plans, the pipeline is estimated at about 300 homes, far below places like New York City at roughly 15,000 and Washington, D.C. at about 8,500.

What to watch

Converting offices into apartments is often hard because office buildings are not designed for everyday living. Things like plumbing, window placement, and floor layouts can make the work expensive, like trying to turn a warehouse into a cozy house. A key question is whether these new incentives are enough to overcome costs and financing challenges, and whether any project finally reaches completion.

Source: NYTimes