Sorry, But SF’s Empty Office Towers Won’t Turn Easily into Housing
By: Adam Brinklow
Tags: Coronavirus, Housing, San Francisco, Urban Planning, Real Estate

The white-collar office is dead, killed by COVID-19 and America’s new normal of working from home. In its wake, cities like San Francisco can reclaim huge swaths of prime real estate and transform both downtown living and urban planning.

Or at least, that’s the dream of certain urban futurist types in 2020, who look at floor upon floor of expensive office space rendered tomb-like since March and imagine the potential to create — what else? — new housing.

“You could take a couple million feet of space and convert [it] to 200 square-foot mini-apartments to house every homeless person in San Francisco,” Jon Evans, CTO of the consultancy firm HappyFunCorp (yes, really), wrote in May of this year, predicting an “officepocalypse” that will liberate business districts for radical redevelopment. (Across the country in Manhattan, where much of the 400 million square feet of office space sits empty, the idea has some buzz.)

It’s appealing when you consider thousands of small businesses — lunch and coffee joints, pharmacies, office supply stores, happy hour bars, and more — have been left bereft without office worker customers. Perhaps new residences could fill the void.

There’s even a certain populist appeal to the idea: San Francisco pushes Big Tech from its lofty perch and opens the doors of its palaces to the people, in a kind of nouveau French Revolutionary fervor, sans any beheadings.

It’s a compelling fantasy (and one that we’ve entertained before in SF), but the reality is likely to be much different: Developers, planners, architects, and financiers warn that while such metamorphoses are not impossible, they’re much more likely to be modest affairs rather than dramatic transformations.

Office museums

One thing is undeniable: The public health crisis has rendered San Francisco’s high-pressure office landscape desolate. In October, SocketSite calculated that the volume of vacant office space in the city (nearly 12 million square feet) is equivalent to about 8.7 Salesforce Towers, or some 516 floors of Salesforce Tower space.

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This time last year, Class A offices in SF rented for over $59 per square foot on average. Now many of these buildings are mere museums of the way things used to be. (Not that anybody can visit them.) Companies like Google and Facebook say they expect to keep workers at home until at least mid-2021. Salesforce, the city’s biggest private employer, will be remote until next August, at the earliest.

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But why stop there? Why continue paying for these expensive boxes that most employers don’t really need? Social media firm Pinterest paid $90 million this summer to break a lease in a yet-to-be-constructed building South of Market.

Commercial landlords and developers might hold fast to empty spaces, waiting for a mass return; offices make too much money (much more than most SF apartments) to give up without a fight. Many companies still favor the office environment to manage their workforce — hence why they didn’t make the shift years ago.

“You’ll see a hybrid, people at home two or three days and work two or three days, and companies will want shared space rather than their own space,” John Rahaim, who was San Francisco’s planning director from 2008 to 2020, tells The Frisc. Hybridization would blunt office demand, but not eliminate it.

The iconic 140 New Montgomery, aka the Pacific Telephone & Telegraph building, now Yelp HQ, could have been apartments. (jdeeringdavis/Creative Commons)

Rahaim also cautions that the market is anything but predictable: “The Yelp building on New Montgomery, we approved that during the recession as a residential conversion. Then suddenly the tech industry started moving back in and the developer changed his mind.”

For context, look back at reporting about office bloat in the wake of the dot-com bust of 2001. It all sounds quite familiar: vacant buildings, soaring housing prices, and yes, some buildings converted to residential, but not enough to really alter the landscape.

Where the city ends up two, three, or five years from now is impossible to predict. Even if some companies insist employees return, norms are shifting. In a new Pew Research Center survey, 54 percent of Americans who say their job can be done from home also want to work from home after the pandemic.

Of floor plates and plumbing

There’s a more practical reason many huge buildings aren’t likely to become places to live: A Class A office building, with sprawling floors, open spaces, and centralized bathrooms and elevators, is put together differently than an apartment complex.

“I don’t think it’s a straightforward effort to convert a high-rise office into housing,” developer Charmaine Curtis says. “Most office buildings are concrete high rises and don’t lend themselves to having holes drilled all over to accommodate different electrical and mechanical systems.”

‘We looked at a project on Sacramento Street, but because of the exits and the fire safety and the elevator location, as well as the light and air requirements, the project became unfeasible.’ — Jon Dishotsky, developer

Office buildings favor large floor plates that leave workers far away from windows and exits. Commercial landlords like a lot of space in the middle of properties to maximize rentable square footage, but you can’t just swap out worker cubicles and cram the floor of a high rise with tiny windowless studios.

“It’s very challenging with an open floor plate and perimeter glass,” says Liz Ranieri, of Kuth Ranieri Architects. “It’s hard to introduce plumbing throughout all that space and create apartments. If you’re talking about big suites, like very high-end units with panoramic views,” that’s one thing, she adds. But it’s a far cry from a vision of hundreds of affordable apartments.

Charmaine Curtis: “We live in a rarified world.” (Photo: Curtis Development)

Jon Dishotsky, founder of Starcity, a developer of co-living residential spaces, says design problems have scuttled office-to-residential conversion plans. “We looked at a project on Sacramento Street,” Dishotsky tells The Frisc. “But because of the exits and the fire safety and the elevator location, as well as the light and air requirements, the project became unfeasible.”

Once in a while, it’s possible. Dishotsky’s company has done it before; Kuth Ranieri is promoting elaborate “micro hoods” as the future of some neglected buildings; and Curtis has worked on conversions in the past, because, she notes, “this is San Francisco, and we live in a rarefied world” that can make even thorny jobs worth it sometimes.

Nevertheless, many proposals just won’t pencil out. “I was talking to someone looking at a commercial property [for this kind of project] in SF just yesterday,” mortgage broker Chris Mason tells The Frisc. “My notes, as someone who stands to make a commission, were: ‘unicorn hunter.’”

So many hurdles

As with all development, there are rules for changing the use of a building in San Francisco. Sometimes, if the regulatory gods are kind, it’s a relatively straightforward process; other times, it can add years onto your timetable — or take years off your life.

“Every property in SF falls within 100- and some-odd different zoning districts, and each has different rules,” says Elizabeth Watty, San Francisco’s director of current planning at the city’s Planning Department.

Watty points out that housing is often the kind of new use that provides the path of least resistance. But there are no guarantees: “If you’re going from tech offices to housing, that’s probably your lightest lift,” she says. However, “offices come in many forms, and it comes down to exactly who the tenant is.”

If you’re ousting a nonprofit to build large market-rate units, most likely to be profitable for a developer and easiest to design in a big building, expect the wrath of City Hall — and NIMBYs too, since bringing new people, especially low-income people, to any neighborhood (even a business district) risks their ire. “NIMBYs will be NIMBYs,” says Curtis.

Each of these hurdles winnows down the conversions likely to make it to the permit stage: Some will falter because office suites remain too valuable, some will be too expensive to redesign, some will be cast into permit limbo, and some NIMBYed to death. “It’s choose your own adventure,” says Nick Pounder, a permit expediter with Burnham Nationwide. “You really have to investigate what you’re in for.”

Think smaller

The conversions that become reality won’t be enough to turn the financial district into a vertical Bernal Heights. Rather than glass-walled high rises, housing advocates trolling for space should perhaps think smaller.“It works on buildings from the 1920s and ’30s,” suggests Phil Badiner, who was the city’s top zoning administrator during the dot-com downturn and the rejuvenation that followed. (He resigned in 2010 amid scandal.) “They work because they’ve got small floor plates, and you get light into an office, and they’ve lost [more of] their economic value as an office.”

660 Mission Street (top) and 512 Second Street (bottom) are the types of buildings that SF planners and architects say are housing candidates if our pandemic rearrangement becomes permanent. (Photos: Alex Lash)

Ranieri agrees. “A lot of the early building stock are double-loaded corridors with small office suites, closer to a residential scale, and they are quite compatible” with housing uses, she says.

Most of us overlook these older midrise buildings if we don’t work or have business there. They’re common across what Watty calls “the greater downtown,” around the edges of the financial district, South Beach, Rincon Hill, and as far south as Sixth Street.

It’s hard to tell via public records how many of these buildings exist, and Watty and others interviewed couldn’t put a number to it. But it’s not hard to find buildings that fit the description. At 512 Second Street, four tech companies occupy four floors of a building with a charming brickwork facade. At 660 Mission Street, near the Yerba Buena museum cluster, four tenants are listed in a four-story building. The front door is secured with a Kryptonite lock. (Note: This isn’t to say these particular buildings are candidates for housing conversion, but that they’re of a type that would make more sense than a high rise.)

They wouldn’t be as flashy as a haven for the formerly homeless high atop 555 California Street, or cracking open the glass facade of Park Tower like a piñata and finding enough affordable housing for the whole city inside. It’s not a revolution from the top floors down. But it might be space for a few more people to fit into San Francisco’s increasingly uncertain future.

Adam Brinklow has lived in and written about San Francisco for 13 years, covering local communities for outlets like Curbed SF, SFGate, San Francisco magazine, SF Weekly, and EDGE SF.

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