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State bill would speed up converting empty downtown offices to housing

Developers are aiming to convert a section of office space in the Warfield building into 35 apartments. | Paul Chinn/The San Francisco Chronicle via Getty Images

Assemblymember Matt Haney has weighed in on San Francisco’s Downtown recovery with new legislation to expedite projects that convert office space to housing.

The Office to Housing Conversion Act promises to make approval for conversion projects—which tend to be very complicated and expensive—automatic. It would also block municipalities from adding on additional fees and requirements. 

The bill is based in part on the Downtown Calgary Development Incentive Program, which offers qualifying projects in Calgary, Alberta, a dollar amount per-square-foot grant provided they meet certain criteria. According to a Calgary Herald article, that city has converted over a million square feet of office space and is considering expanding uses for empty office buildings to hotels and schools. 

“Isolating jobs from housing was always a mistake,” said bill supporter Laura Foote, executive director at YIMBY Action. “It’s time to use the space we have to reimagine what’s possible for our downtowns. It’s time to create vibrant, mixed-use communities.”

The bill would also set up a special fund that could  provide grants for most office-to-housing conversions; San Francisco has been exploring similar incentive plans. Haney’s bill would also mandate 10% of any housing units in qualifying projects to be set aside for low- or moderate-income households.

At least one local architect has identified a cohort of office buildings—pre-1950 buildings less than nine stories tall—as relatively accessible candidates for conversion. 

Such conversions, assuming they can be made financially feasible, could provide a low-impact way out of two of San Francisco’s big problems: a moribund downtown and a lack of housing supply. Killing two birds with one stone has proved to be an alluring option, though vanishingly few developers have pursued conversions as of yet. 

San Francisco is losing billions of dollars a year in local spending to remote work as office vacancies climbed past 27% last quarter, threatening the city’s tax revenue and small businesses that serve commuters. . 

“How people work was permanently changed by the pandemic, and the downtowns that relied on commuters are starting to look like ghost towns,” Haney said. “Turning empty offices into housing is one of the only paths forward to saving our downtowns.”

The bill could face some pushback due to it being seen by municipalities as a further erosion of local control. It should be forwarded to the Assembly’s housing committee within four weeks.