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Much as I would like the opposite to be true, it's good to see the reality check at the bottom: > And once again, while tempting to see or promote an opportuni

Much as I would like the opposite to be true, it's good to see the reality check at the bottom: > And once again, while tempting to see or promote an opportunity to convert all the vacant office space into housing in a response to San Francisco’s housing woes, the conversion of existing office space to residential use currently makes no economic sense for the vast majority of downtown San Francisco buildings, due to the relative value of each use and the cost of conversion. Residential conversion always comes up in these discussions, but the truth is it's a much more limited opportunity than it appears at first glance.

julianeon 4y ago
People said that before and it was true before - office space truly was more profitable - but now things have changed. Drastically. So things that would've been conventional wisdom for 100 years, that were true for each generation, have suddenly stopped being true. When people say 'no residential' I would say: what's your alternative? Office space - obviously failing, why we're having this discussion. Restaurant/coffeeshop/cafe space - nope, too much of it. Not viable. The only option left is residential. To be clear, if someone can come up with a better option in 2022 than residential, I'm happy to say I was wrong. But what it is? I just covered the possibilities. There's nothing else. There's only one thing that can happen, at this point: landlords can keep their spaces unrented. Or they can convert them to residential. There is no third possibility. That's all there is.
- makestuff 4y ago
  Well there is a fourth option. Extensive lobbying by corporations who own a ton of realestate to force people back into the office by giving tax incentives to corporations who have in office workers.
- mortenjorck 4y ago
  Indeed, I wonder that too: when push comes to shove and the commercial office market is left with billions of dollars in worthless real estate, what happens next? My hunch is that you're right, but that it will follow a different pattern from what is popularly imagined. I think we tend to have this lofty vision of office towers being converted into no-frills, affordable homes that will offer working-class families a place to live close to where they work, but this vision doesn't really match with economic reality. Much more likely in my view, given present residential construction macro-trends and the actual costs of residential conversion, is this: A slow process of converting the buildings that are currently losing the most money into luxury housing. The conversions will be massively expensive, in some cases more than the cost of new construction, but they will happen. The upside of this, while much more limited in scope than the popular conception of residential conversion, is that it will increase the housing supply, and stands a chance to ultimately improve affordability as those who can afford it upgrade to higher-end homes.
tomtheelder 4y ago
It's for sure a limited opportunity for now, but the bottom still hasn't properly fallen out of the market for office space IMO, and I think many owners are still clinging to hope that their investments aren't completely trashed. Also if vacancy rates keep rising, at some point the city will probably look to institute an office -> residence conversion program. Empty offices are good for no one. But it's really hard to say how this plays out. Time will tell.
deleted 4y ago
[deleted]
thechao 4y ago
I'm trying to imagine how you refit plumbing and elevators on a commercial building. The office building we have at work has 6 toilets per floor, and each floor is probably 50,000 sqft. If you replaced that with residential, you'd end up with, like, 70 toilets per floor, plus 50 showers, 70+ sinks, ... I mean holy crap. There's only three elevators. That'd probably work? Maybe? Plenty of parking, though.
- jltsiren 4y ago
  My impression is that modern office buildings are basically stacks of exhibition halls. You can repurpose them easily and build the infrastructure you need. The biggest obstacle to converting them to residential is not plumbing or elevators but the lack of windows near the core. Of course, it's not the modern centrally located office buildings that are vacant but the older ones at more remote locations. Converting those is going to be more expensive, and it may be more cost-effective to simply demolish them and build new residential.
  - xsmasher 4y ago
    A guest on a KQED mentioned this a month or two ago; SF building code requires a certain amount of natural light for bedrooms and other rooms (Kitchen, home office, media rooms excepted.) Many of the older office spaces in SF might be impossible to convert under current standards; the city may have to exempt conversions from those rules or something. They might do if if the moneyed interests lobby for it.
wwweston 4y ago
> due to the relative value of each use and the cost of conversion Presumably, the relative value will change at some point if demand for office space falls off a cliff. I also suspect there are public policy factors that could be brought to bear. Vacancy taxes (perhaps even scaling with vacancy volume) are underused. Put them into place, use the revenue to fund pilot conversion projects, prizes for innovation on that front, and eventually perhaps subsidies. As always, incentives matter. But often overlooked is that incentives are malleable.
glomgril 4y ago
What about instead of turning a floor of an office building into a handful of luxury apartments, turn it into several dozen SROs? (genuine question -- I am curious if the same economic unfeasibility concern would apply equally for very small SRO-style units)

julianeon 4y ago

People said that before and it was true before - office space truly was more profitable - but now things have changed. Drastically. So things that would've been conventional wisdom for 100 years, that were true for each generation, have suddenly stopped being true. When people say 'no residential' I would say: what's your alternative? Office space - obviously failing, why we're having this discussion. Restaurant/coffeeshop/cafe space - nope, too much of it. Not viable. The only option left is residential. To be clear, if someone can come up with a better option in 2022 than residential, I'm happy to say I was wrong. But what it is? I just covered the possibilities. There's nothing else. There's only one thing that can happen, at this point: landlords can keep their spaces unrented. Or they can convert them to residential. There is no third possibility. That's all there is.

makestuff 4y ago
Well there is a fourth option. Extensive lobbying by corporations who own a ton of realestate to force people back into the office by giving tax incentives to corporations who have in office workers.
mortenjorck 4y ago
Indeed, I wonder that too: when push comes to shove and the commercial office market is left with billions of dollars in worthless real estate, what happens next? My hunch is that you're right, but that it will follow a different pattern from what is popularly imagined. I think we tend to have this lofty vision of office towers being converted into no-frills, affordable homes that will offer working-class families a place to live close to where they work, but this vision doesn't really match with economic reality. Much more likely in my view, given present residential construction macro-trends and the actual costs of residential conversion, is this: A slow process of converting the buildings that are currently losing the most money into luxury housing. The conversions will be massively expensive, in some cases more than the cost of new construction, but they will happen. The upside of this, while much more limited in scope than the popular conception of residential conversion, is that it will increase the housing supply, and stands a chance to ultimately improve affordability as those who can afford it upgrade to higher-end homes.

tomtheelder 4y ago

It's for sure a limited opportunity for now, but the bottom still hasn't properly fallen out of the market for office space IMO, and I think many owners are still clinging to hope that their investments aren't completely trashed. Also if vacancy rates keep rising, at some point the city will probably look to institute an office -> residence conversion program. Empty offices are good for no one. But it's really hard to say how this plays out. Time will tell.

deleted 4y ago

[deleted]

thechao 4y ago

I'm trying to imagine how you refit plumbing and elevators on a commercial building. The office building we have at work has 6 toilets per floor, and each floor is probably 50,000 sqft. If you replaced that with residential, you'd end up with, like, 70 toilets per floor, plus 50 showers, 70+ sinks, ... I mean holy crap. There's only three elevators. That'd probably work? Maybe? Plenty of parking, though.

jltsiren 4y ago
My impression is that modern office buildings are basically stacks of exhibition halls. You can repurpose them easily and build the infrastructure you need. The biggest obstacle to converting them to residential is not plumbing or elevators but the lack of windows near the core. Of course, it's not the modern centrally located office buildings that are vacant but the older ones at more remote locations. Converting those is going to be more expensive, and it may be more cost-effective to simply demolish them and build new residential.
- xsmasher 4y ago
  A guest on a KQED mentioned this a month or two ago; SF building code requires a certain amount of natural light for bedrooms and other rooms (Kitchen, home office, media rooms excepted.) Many of the older office spaces in SF might be impossible to convert under current standards; the city may have to exempt conversions from those rules or something. They might do if if the moneyed interests lobby for it.

wwweston 4y ago

> due to the relative value of each use and the cost of conversion Presumably, the relative value will change at some point if demand for office space falls off a cliff. I also suspect there are public policy factors that could be brought to bear. Vacancy taxes (perhaps even scaling with vacancy volume) are underused. Put them into place, use the revenue to fund pilot conversion projects, prizes for innovation on that front, and eventually perhaps subsidies. As always, incentives matter. But often overlooked is that incentives are malleable.

glomgril 4y ago

What about instead of turning a floor of an office building into a handful of luxury apartments, turn it into several dozen SROs? (genuine question -- I am curious if the same economic unfeasibility concern would apply equally for very small SRO-style units)