Newsom wants $600 million to convert spaces like offices to housing. Will S.F. respond?

But developers have said there are numerous hurdles to converting offices to housing, including high construction costs and lack of access to light and air within structures. The city’s Planning Department database shows no major office to housing conversions have been proposed during the pandemic.

A few high-profile conversions were completed prior to the pandemic, including the 418-unit 100 Van Ness Ave., the former California State Automobile Association headquarters and the ultraluxury Pacific condo project, which had more than $300 million in sales. The former Chronicle offices at 690 Market St. are now the Ritz-Carlton Club and Residences.

But other efforts to convert buildings have struggled. Starcity, a startup that sought to turn old commercial buildings into group housing, was sold to a competitor last year.

San Francisco office vacancy rose to a record high 23.8% in the first quarter, or 20.4 million square feet vacant, according to real estate brokerage firm CBRE. But 8.4 million square feet was listed as sublease space, meaning landlords are still collecting rent from the original tenant. Average asking rents were $76.27 per square foot annually, higher than the rents on a typical apartment.

Some developers are moving forward with converting aging malls sites into large housing projects, but plans typically involve demolishing the existing buildings or creating new homes on top of parking lots. Such projects are vast undertakings and can require billions of dollars of spending. Brookfield has proposed nearly 3,000 housing units at the Stonestown Galleria, for example, while the former Vallco mall in Cupertino is being developed into 2,400 homes and almost 2 millions square feet of office space.

Newsom’s budget proposal calls for a total of $37 billion for housing investment and new infrastructure such as broadband internet.

Roland Li is a San Francisco Chronicle staff writer. Email: roland.li@sfchronicle.com Twitter: @rolandlisf

Article source: https://www.sfchronicle.com/realestate/article/Gov-Newsom-wants-600-million-for-housing-17172100.php

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