Why empty offices aren’t being turned into housing, despite lengthy vacancies

SAN FRANCISCO — Strachan Forgan, an architect who works downtown at 255 California St., is still struck by how much street life has changed around his office building. Gone are the pre-pandemic crowds of bankers and lawyers who jammed into the famed Tadich Grill across the street from his office. In recent months in his two-block walk from the nearby train station, he said, he has frequently been verbally assaulted and physically threatened by the rising number of homeless people.

That’s because even though San Francisco commercial office buildings are emptier than they have been in decades and the city is estimated to have 8,000 homeless people, it’s unlikely that any of the empty offices will become homes for anyone at any economic level, even though more housing is desperately needed in general. Forgan, who both works on office-to-housing conversions and struggles to find employees who can find affordable housing to work at his firm, said it’s too difficult to make happen.

“It almost takes the stars to align,” he said. “It’s a unique set of circumstances that makes sense. So that’s why it is relatively rare.”

Such conversions aren’t happening in the rest of the country, as well. Planning departments of major cities, including San Francisco; San Jose, California; Seattle; Phoenix; New York; Fort Worth, Texas; Dallas; and Houston, said there are very few, if any, new attempts to turn existing offices into housing. Over the last two years, even during the height of the pandemic, there have been just a handful of such conversion applications in those cities, building officials said.

The New York City Department of Buildings has received just 100 project applications for commercial-to-residential conversion since Jan. 1, 2020, said Andrew Rudansky, the agency’s spokesperson. Just 12 have been filed this year.

“This includes applications for large expansion and conversion projects for the entire building, as well as applications for smaller projects that only change the use of a single floor or part of a building,” Rudansky said by email.

Even in cities like San Francisco, where homelessness remains a major challenge and office vacancy is relatively high, developers, property owners and city officials don’t think conversions make financial sense in the long run.

“There’s definitely an incentive for cities to continue to promote vibrant central business districts that are centered around employment,” said Manan Shah, an architect in Oakland, California, with Gensler, a firm that has worked on and studied such conversions for years. “We would need to see a long-term trend and vacancy was high for a number of years for somebody to take the time to go through the conversion process.”

Empty buildings

High office vacancy rates are plaguing cities nationwide, according to Avison Young, a commercial real estate firm. In the second quarter of this year, the commercial vacancy rate across San Francisco reached 15.4 percent, more than the 12 percent figure last…

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