Office Building Owners Line Up for Conversions in San Francisco

Eight office building owners have responded to the city’s “request for information” aiming to identify landlords interested in converting their San Francisco properties to apartments or condos, according to the city’s Office of Economic and Workforce Development.

Five of the buildings are in the greater Mid-Market and Civic Center neighborhoods, two are in the Financial District and one is near Yerba Buena.

All of them are aging: they were built between 1900 and 1967, the San Francisco Chronicle reported. The combined square footage of the eight buildings totals less than 1M SF.

The city estimates that if all eight properties were converted from office to residential, it would create about 1,100 new apartment units, with the largest building yielding 300 units and the smallest about 40.

The city agreed to keep the addresses of the buildings confidential because existing tenants could be impacted. The Office of Economic and Workforce Development is conducting one-on-one interviews with the eight property owners.

Anne Taupier, the city’s economic development director, told the Chronicle the city interprets the response to its request for information as an indication that an increasing number of landlords have concluded that the persistence of remote work has rendered some older office buildings obsolete.

“We were pleased with the responses, it was more than we had expected and there was a good variety of buildings,” Taupier told the newspaper. “We think there is a chance to see some game-changing activation.”

Taupier indicated that the eight respondents own buildings that are vacant, partially vacant or have tenants with expiring leases who may not renew. She described the request for information as a “fact-finding mission” to give the city a better understanding of the financial or bureaucratic obstacles that stand in the way of office conversions.

She said most of the aging properties would be candidates for Mills Act tax credits, which allow cities to reduce taxes for 10 years or more to owners of historic properties.

Specifically, the economic development director said the city wanted to identify “financial shortfalls” hampering conversions and to determine solutions either in the form of new legislation or ballot initiatives.

San Francisco has been easing zoning regulation and lowering fees to try to spur office-to-resi conversions. State Sen. Scott Weiner has announced that he plans to introduce legislation in January creating tax breaks for conversion projects, incentives that will be part of a downtown revitalization bill.