{"id":30422,"date":"2023-12-07T12:46:16","date_gmt":"2023-12-07T20:46:16","guid":{"rendered":"https:\/\/occupysf.net\/?p=30422"},"modified":"2023-12-07T13:27:57","modified_gmt":"2023-12-07T21:27:57","slug":"these-s-f-office-buildings-are-the-top-candidates-to-convert-to-housing","status":"publish","type":"post","link":"https:\/\/occupysf.net\/index.php\/2023\/12\/07\/these-s-f-office-buildings-are-the-top-candidates-to-convert-to-housing\/","title":{"rendered":"These S.F. office buildings are the top candidates to convert to housing"},"content":{"rendered":"\n

By J.K. Dineen<\/a> Dec 6, 2023 (SFChronicle.com)<\/p>\n\n\n\n

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The building at 601 Market St. in San Francisco is considered a top target for an office-to-housing conversion, according to Moody\u2019s.Stephen Lam\/The Chronicle<\/figcaption><\/figure>\n\n\n\n

City planning officials have approved San Francisco\u2019s first post-pandemic office-to-residential conversion<\/a>, and a new report from Moody\u2019s Analytics suggests that 13% of the city\u2019s smaller historic office buildings could be good candidates for housing.<\/p>\n\n\n\n

Planning staff recently approved a site permit for a 45-unit redevelopment of 988 Market St., the historic office building next to the Warfield Theater. On Thursday, the developer will be before a Board of Supervisors committee for approval of Mills Act tax abatement, intended to help property owners finance often-expensive renovations of historic buildings.<\/p>\n\n\n\n

The property owner, Group I, didn\u2019t have to seek a conditional use authorization or variance thanks to the recently passed \u201ccommercial to residential adaptive reuse and downtown economic revitalization\u201d ordinance approved in June. That legislation<\/a>, sponsored by Mayor London Breed and Supervisor Aaron Peskin, also exempted conversions from several fees and taxes.<\/p>\n\n\n\n

In addition, Breed is planning on going to the voters in March of next year with a ballot measure that would waive the city\u2019s transfer tax on buildings that have been converted from office to residential use.<\/p>\n\n\n\n

Group I principal Mark Shkolnikov said that construction would start next year and take about nine months. The Board of Supervisors has to approve the tax credits by the end of the year, or Group I would have to wait another year before starting construction.\u00a0<\/p>\n\n\n\n

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An exterior view of 604 Mission St. in San Francisco, one of the several buildings considered fine candidates for office-to-housing conversions, according to Moody\u2019s.Stephen Lam\/The Chronicle<\/figcaption><\/figure>\n\n\n\n

\u201cWe are down to the wire, but I think we have a good game plan,\u201d he said. <\/p>\n\n\n\n

The Moody\u2019s report includes a \u201ctop 10\u201d list of buildings that are most suitable for conversion<\/a>. The list includes three buildings on the south side of Market Street \u2014 611 Mission, 602-606 Mission, and 601 Market \u2014 as well as seven buildings in and around the traditional Financial District and Jackson Square. The seven: 211 Sutter St., 391 Sutter St., 222 Front St., 535 Pacific St., 545 Sansome St., 250 Montgomery St. and 133 Kearny St.<\/p>\n\n\n\n

Calls to brokers representing the owners of the buildings were not returned before publication, so it\u2019s unclear if the landlords would be interested in converting to residential.<\/p>\n\n\n\n

In analyzing downtown buildings, Moody\u2019s looked for\u00a0properties near transportation and amenities with high vacancy and small enough floor plates to allow for natural light. It focused on downtown neighborhoods and buildings with a high vacancy or looming lease expirations unlikely to be renewed.<\/p>\n\n\n\n

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The building at 133 Kearny St. is seen in San Francisco. Moody\u2019s has included it on a list of the city\u2019s top candidates for office-to-housing conversions.Stephen Lam\/The Chronicle<\/figcaption><\/figure>\n\n\n\n

Moody\u2019s Analytics also compared San Francisco opportunities to permit data from New York City, Chicago and Washington, D.C., looking at 77 conversion projects that occurred over the past 20 years. The analysis showed that the average vintage of conversion properties tended to be older \u2014 the average year built was 1932. The study showed that the buildings were 24% smaller than the average comparable structures. <\/p>\n\n\n\n

The report also concentrated on \u201cclass B and C\u201d properties, the value of which have plummeted as post-pandemic work-from-home has sapped downtown San Francisco of its lifeblood. With 30% vacancy and a slew of buildings facing foreclosure, the value of some downtown buildings have been cut in half, with several Financial District structures selling for less than $200 a square foot.<\/p>\n\n\n\n

Eight building owners responded to a recent solicitation<\/a> by the city\u2019s Office of Economic and Workforce Development aimed at identifying landlords interested in converting their properties to apartments or condos. If all eight properties were to be converted, it would create around 1,100 units. <\/p>\n\n\n\n

The combination of the sinking values, streamlined approvals and tax breaks make some conversions viable, according to Shkolnikov, although it\u2019s hard to generalize with historic buildings.\u00a0<\/p>\n\n\n\n

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The building at 211 Sutter St. in San Francisco is one that Moody\u2019s believes would be a good candidate to become housing.Stephen Lam\/The Chronicle<\/figcaption><\/figure>\n\n\n\n

\u201cIf these buildings trade for sub-$200 (a square foot) or sub-$150, we do think there is a path to profitability across the city,\u201d Shkolnikov said. \u201cBut these old buildings are so idiosyncratic.\u201d<\/p>\n\n\n\n

Planning Director Rich Hillis said there is another office building owner on Market Street working on acquiring a building for a conversion project, but that the deal has not closed. He suggested the city might have to sweeten the pot with more incentives if it wants to see a critical mass of projects. <\/p>\n\n\n\n

\u201cGenerally, where cities have been successful in larger number of conversions, they have provided financial incentives to assist with feasibility,\u201d he said.<\/p>\n\n\n\n

In the case of 988 Market St., Group I has an advantage because the company has owned the building for more than a decade. <\/p>\n\n\n\n

\u201cWe work in that building,\u201d Shkolnikov said. \u201cWe know it inside and out.\u201d<\/p>\n\n\n\n

Reach J.K. Dineen: jdineen@sfchronicle.com<\/p>\n\n\n\n

Dec 6, 2023<\/p>\n\n\n\n

By J.K. Dineen<\/a><\/a><\/a><\/p>\n\n\n\n

J.K. Dineen covers housing and real estate development. He joined The Chronicle in 2014 covering San Francisco land use politics for the City Hall team. He has since expanded his focus to explore housing and development issues throughout Northern California. He is the author of two books: “Here Tomorrow” (Heyday, 2013) and “High Spirits” (Heyday, 2015).<\/p>\n\n\n\n

He can be reached at jdineen@sfchronicle.com<\/a>.<\/p>\n","protected":false},"excerpt":{"rendered":"

By J.K. Dineen Dec 6, 2023 (SFChronicle.com) City planning officials have approved San Francisco\u2019s first post-pandemic office-to-residential conversion, and a new report from Moody\u2019s Analytics suggests that 13% of the city\u2019s smaller historic office buildings could be good candidates for housing. Planning staff recently approved a site permit for a 45-unit redevelopment… Continue reading → <\/span><\/a><\/p>\n","protected":false},"author":1,"featured_media":0,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[1],"tags":[1563],"_links":{"self":[{"href":"https:\/\/occupysf.net\/index.php\/wp-json\/wp\/v2\/posts\/30422"}],"collection":[{"href":"https:\/\/occupysf.net\/index.php\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/occupysf.net\/index.php\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/occupysf.net\/index.php\/wp-json\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"https:\/\/occupysf.net\/index.php\/wp-json\/wp\/v2\/comments?post=30422"}],"version-history":[{"count":2,"href":"https:\/\/occupysf.net\/index.php\/wp-json\/wp\/v2\/posts\/30422\/revisions"}],"predecessor-version":[{"id":30437,"href":"https:\/\/occupysf.net\/index.php\/wp-json\/wp\/v2\/posts\/30422\/revisions\/30437"}],"wp:attachment":[{"href":"https:\/\/occupysf.net\/index.php\/wp-json\/wp\/v2\/media?parent=30422"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/occupysf.net\/index.php\/wp-json\/wp\/v2\/categories?post=30422"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/occupysf.net\/index.php\/wp-json\/wp\/v2\/tags?post=30422"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}