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Downtown rescue plan calls for office-to-housing conversions

A city street lined with tall buildings, pedestrians crossing, a bus, and traffic lights at dusk.
Office buildings in the SoMa district of San Francisco. | Getty Images

The road map to rescue San Francisco’s Downtown is beginning to take shape with new legislation meant to streamline the process of turning underused office buildings to housing and address the growing number of commercial vacancies in the city’s central business district.

Planning officials have said that, unlike other parts of the city, housing conversions are allowed Downtown under current zoning. The problem often lies in the details, such as building standards for entrances, exits and open spaces, which can be difficult to achieve in older Downtown buildings.  

The legislation, from Mayor London Breed and Supervisor Aaron Peskin, would change the city's planning codes to relax rules for conversion projects like rear yard, exposure and parking requirements. 

San Francisco Supervisor Aaron Peskin has made Downtown revitalization a key legislative priority. | Brian Feulner for The Standard

The legislation will be heard by the Planning Commission and the Building Inspection Commission in the coming weeks before going to the Board of Supervisors for approval. 

Peskin, who represents Downtown and North Beach, acknowledged in an interview that the legislative process will only be “around half the battle.” 

It’s in the Details

Among the adjustments yet to be made are technical changes that need to be hammered out by various city departments and shared with developers and building owners. But the city has a blueprint for this process in the example of multifamily accessory dwelling unit (ADU) conversions.

Assemblymember Matt Haney has also introduced new state legislation to expedite projects that convert office space to housing.

“This is step one towards implementing a solution and transformation to Downtown,” Peskin said. “Smaller buildings are owned by family trusts and individuals. They need technical assistance and their hands. People are going to need to sell this to them.”

Mark Hogan, a local architect with OpenScope Studio who worked closely with Peskin on the legislation, said that building, fire and planning departments have already been meeting to talk through some of the issues. 

Hogan's suggested changes include categorizing fire escapes as a second means of exit or allowing the use of existing elevators, rather than installing much larger elevators as current building codes require.

“The changes will provide more certainty by minimizing the chance that you’ll need to go into hearings, and clarifying the exceptions to the planning code you’ll receive,” Hogan said. “The idea is to make sure these modifications are all not going to be reviewed on a case-by-case basis with potentially wildly different answers.”

Office-to-residential conversions have been positioned as a way to rescue a Downtown hollowed out by remote work. But there are several major stumbling blocks, chief among them issues around cost and uncertainty due to San Francisco’s sky-high building costs and complex permitting process.

Mayor London Breed delivers her State of the City address at Pier 70 on Feb. 9, 2023. | Noah Berger for The Standard

“These changes shouldn’t be something that requires granting exceptions through lengthy paperwork and exhaustive public hearings,” said Mayor London Breed in a statement. “We need to make the process easier for getting our buildings active and full.”

Only one office-to-residential conversion project has been proposed Downtown since the pandemic: a slice of office space in the historic Warfield Building that would be turned into 34 apartments.

Buildings are beginning to lose value in line with reduced demand for office space. That’s bad news for the city’s fiscal outlook, but could create new opportunities for investors to convert and revitalize them. 

“Collectively, the property owners have been in a state of denial, hoping that all of the office workers are going to be flooding back to work and ignoring the reality that the nature of work is forever changed,” Peskin said, adding that this reality is becoming ultimately impossible to ignore. 

Peskin said the policy changes in the legislation will last for an initial five-year period with the possibility of an extension in a bid to create a “hurry-up incentive” for developers and investors. 

“I don’t want anybody to think that office-to-residential is going to be a panacea, and we can flick a switch to create 10,000 new units overnight,” Peskin said. “But I would hope in a half decade, we’ll see a bunch of conversions, an injection of the arts and real placemaking creating interesting nodes Downtown.”

One barrier to conversions not addressed in the legislation is making the permitting process as a whole faster and more efficient.

“That’s huge, because frankly if it takes you two or three years to get a permit to do these conversions, not a lot of people are going to want to do it,” Hogan said. 

Making Downtown More Livable

Robbie Silver, executive director of the Downtown SF Partnership, said he’s hopeful the legislation “will energize The City’s economic core, support housing density, and cut bureaucracy.”

Silver hopes to create opportunities for investment in the organization’s Public Realm Action Plan, which is meant to shift the culture Downtown to include more gathering spaces for pedestrians centered around areas like Belden Place and Leidesdorff Alley.

Marisa Rodriguez, the executive director of the Union Square Alliance, in Union Square on Nov. 15, 2022 | Paul Kuroda for The Standard

The new legislation also targets zoning rules in Union Square, opening up alternative uses for the city’s central shopping district. Additional additional office, service and retail uses would be allowed on upper floors, with entertainment, flexible retail and workspaces on the ground level.

Among other restrictions, office uses are currently not allowed on the second floor and require conditional use approval for floors three through six. 

“In the new normal of hybrid work, the city has to be proactive about helping create new reasons for residents, workers and visitors to want to come and spend their time Downtown,” said Kate Sofis, executive director of the Office of Economic and Workforce Development (OEWD), in a statement. 

The third component of the legislation will streamline Downtown development review to allow for a greater variety of ground floor uses and broaden the type of temporary pop-ups that can be used to activate the vacant spaces that have proliferated.  

Peskin said the government should play a matchmaking role to find willing landlords and non-traditional tenants. He said he recently received a call from a local artist and is seeking to link her with Embarcadero Center owner Boston Properties to use one of their vacant spaces as a studio. 

“Let’s turn the lights on as fast as we can and say everything short of a brothel is OK,” Peskin said.

Local nonprofit SF New Deal was awarded a contract by OEWD to help launch a program called Vacant to Vibrant this spring to bring in pop-up activations through grants and technical assistance. 

“Lowering the barriers for temporary and pop-up activations is an essential step to paving the way towards San Francisco’s recovery,” said SF New Deal executive director Simon Bertrang. “We hope to create a window into what the future of Downtown can be: innovative, diverse, creative and vibrant.”

Peskin said he and the mayor discovered they were each working on their own versions of legislation and decided to merge their efforts. The collaboration is a stark contrast to competing proposals meant to reform the Department of Building Inspection and speed up the permitting process.

“I’m very pleased that, instead of having to compete, we were able to collaborate and cooperate and melded them together, taking the best of both versions,” Peskin said. 

Kevin Truong can be reached at kevin@sfstandard.com