Office to housing conversions would likely take 10 years to make a dent, expert says
KGO
By J.R. Stone
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SAN FRANCISCO (KGO) — ABC7 first broke news last week that downtown San Francisco’s vacant office space rate is at an all-time high of 35 percent.
Meaning that more than a third of all office space in the Financial District is sitting empty. Something that San Francisco Mayor London Breed addressed in our ABC7 “Take Action San Francisco” discussion Monday night.
“In my economic recovery plan it has everything to do with changing what downtown, what we traditionally know downtown to be,” said Mayor Breed.
She says that her vision of change doesn’t just involve filling those downtown offices, where in many cases companies have gone remote, it also has to do with housing.
“Something as simple as converting office space to housing and being able to do that without going through a process is something we’ve already done,” said the mayor.
Oz Erickson is with the Emerald Fund, a San Francisco real estate development company, we spoke with him after the discussion with city leaders. He says tax incentives from the city and the state are a must going forward.
“Over a 60-year period, eventually the city will collect roughly three times the amount of taxes by abating it right now,” said Erickson.
Others we spoke with last week described an office-to-housing change as anything but simple.
“We definitely need new housing but it’s very difficult to make those kind of conversions,” says Colin Yasukochi, the executive director of the tech insights center at CBRE. “I think we will start to see those happen fairly soon on a smaller scale and then if the proper incentives are put into place you know maybe two years plus from now.”
The center focuses on the tech industry and how it affects commercial real estate. Yasukochi believes that office-to-housing type of conversion could likely ramp up in two years, but only if interest rates drop.
During Monday’s event, the mayor would not say how long she believes it will take to bring San Francisco’s downtown back. Erickson says there’s no quick fix here. Cutting the red tape is likely to take a year and a half in his opinion, then at least another 8 years to make a dent.
“If you take 5 million out of 25 million that’s a significant percentage and if you then chew up the remaining space at 2 million square feet per year you get down to a reasonable number in 10 years,” says Erickson.
Mayor Breed also spoke about bringing things like a soccer stadium, college classrooms, or even a European spa concept to the downtown area. These are loosely thrown-out ideas of what the future of downtown San Francisco could look like.
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