San Francisco offers with The Challenges of Changing Workplace Area into Residential Items

July 28, 2024

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San Francisco offers with The Challenges of Changing Workplace Area into Residential Items

SAN FRANCISCO (KGO) – San Francisco is still recovering from the pandemic the slowest of all major US cities. Thirty-four percent of downtown office space is now vacant. At the same time, there is not enough housing in the city. Could some of this vacant office space be converted into much-needed housing?

San Francisco is in a constant battle with itself: too much commercial space, but not enough housing.

“In many cases, it is cheaper to remodel one of these buildings than to build new,” says Marc Babsin, head of Emerald Fund, a real estate development company based in San Francisco.

That's what Mayor London Breed wants to hear.

She is convinced that the “coming together” of the two, like a marriage, could contribute to the revitalization of the city center.

“We will continue to adapt, we will adjust and we will get better,” Breed stressed.

The key word is “conversions”. This has been done before.

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In 2006, the Royal Insurance Building on the corner of Sansome and Pine Streets, across from the old Pacific Stock Exchange, was converted from office space into 46 condominiums.

The 52-unit Ritz-Carlton building on Market Street was once the headquarters of the San Francisco Chronicle.

And in the 1930s, AP Giannini had a branch of the Bank of Italy, which later became the Bank of America, which lent Walt Disney the money to complete his first feature film, Snow White, and later for other projects.

This building, One Powell Street, was converted into 44 high-end lofts in 2004.

We know it's possible, but what does it take to convert commercial space into residential units? The answer: It's not that simple.

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Strachan Forgan knows a lot about conversions.

His firm, Solomon Cordwell Buenz, was responsible for the largest office-to-residential conversion in San Francisco's history: 100 Van Ness, a 29-story building that now houses 418 rental units.

100 Van Ness was the old AAA building.

100 Van Ness, the former AAA building, was converted into residential units.

“The biggest change we made to the building was to remove the old precast concrete facade and replace it with floor-to-ceiling glass facades to really exploit the building’s view potential,” explained Forgan.

In many interior renovation projects, plumbing installation is one of the biggest challenges.

“This means we have to cut new vertical risers throughout the building,” Forgan explained.

This means that holes have to be drilled through the concrete.

Each unit must now have its own piping, sprinkler heads, thermostat, heating and ventilation, and lighting.

“Light, air and natural light in the residential units is a big deal,” said Joseph Camajani of engineering consulting firm IMEG. “Many of these offices are very large and deep, and it's difficult to get natural light into the bedroom units.”

For IMEG, a floor-to-ceiling glass façade was ideal.

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One tenant reports that there is an ongoing rat and cockroach problem, the ceiling leaks and she has no hot water. But lawyers are convinced that the city attorney's lawsuit will change everything.

ABC7 asked: When will you decide to tear down the building and rebuild from scratch?

“I think some buildings have reached the end of their useful life and the best use of the property might be to build new buildings there,” Forgan said.

He is currently reviewing 15 possible redevelopments in San Francisco, but only three to five are potential candidates.

The other challenge is dealing with the planning department.

Because the city was determined to make 100 Van Ness a success, approvals were expedited.

The property was purchased in 2011 and was ready for occupancy just four years later.

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Investigators from the city of San Francisco are currently examining the Mint Plaza residential complex.

Other conversions have also proven extremely profitable, such as the conversion of the former University of the Pacific dental school at 2121 Webster Street in Pacific Heights.

It came on the market in 2016 and the sale of the 76 condominiums is said to have brought in $300 million.

But that was then. Today, in 2023, conversions may be less profitable.

“Construction costs have probably doubled compared to last year and rents have now fallen so much that they are barely above the 2012 level,” reveals Babsin.

In addition, when 100 Van Ness was built, the city required owners to set aside 13 percent of the units for affordable housing; today, that number is 21 percent.

Any developer, architect or engineer will tell you that City Hall needs to create more incentives to make these conversions more realistic.

“We have a huge inventory of buildings that could be good enough and could serve the people who need them,” Camajani said.

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