Mayor Lurie, Board of Supervisors Reach Agreement on Legislation to Convert Empty Offices Into New Housing

SAN FRANCISCO – Mayor Daniel Lurie and the Board of Supervisors today announced an agreement on legislation that will make it easier and more financially feasible to convert empty offices and commercial buildings into much-needed housing. Sponsored by Mayor Lurie and co-sponsored by District 6 Supervisor Matt Dorsey and District 3 Supervisor Danny Sauter, the legislation will remove significant barriers to these projects.

This legislation marks another example of the new era of cooperation at City Hall, with Mayor Lurie and supervisors working together to solve the city’s biggest challenges. Earlier this month, the board voted 10-1 to pass Mayor Lurie’s Fentanyl State of Emergency Ordinance.

“Transforming vacant offices into housing will help drive our recovery downtown while creating new homes for San Franciscans,” said Mayor Lurie. “This is a win-win for our city thanks to the new era of collaboration at City Hall, so we can create a thriving, 24/7 downtown that benefits both residents and business. If you see, like we do, that San Francisco is on the rise, our administration stands ready to work with you.”

Despite a post-pandemic office vacancy rate in San Francisco that has risen in all but two of the last 20 quarters to surpass 34% — more than twice the rate in New York and higher than Los Angeles, Austin, and Seattle — financial and bureaucratic hurdles have largely inhibited office-to-housing conversion projects. Even projects that had been previously approved have been unable to start construction due to high fees and prohibitive development costs, leaving communities with empty buildings.

This new legislation will reduce development costs to facilitate these traditionally expensive and complex projects for up to 7 million square feet. It will also extend the application deadline for the Commercial-to-Residential Adaptive Reuse Program, which streamlines approvals by easing zoning and building requirements for office-to-housing conversions.

The Board of Supervisors will also vote on the second and final reading of legislation introduced by Mayor Lurie and sponsored by Supervisor Sauter and District 5 Supervisor Bilal Mahmood to advance a 300-unit housing project in Lower Nob Hill. The project includes 101 rent-restricted homes with no city subsidy – delivering affordable homes while allowing the city’s affordable housing funding to stretch further.

“Mayor Lurie and I are committed to reimagining downtown as a thriving neighborhood where people live, work, and play,” said Supervisor Dorsey. “I represent communities like the East Cut and Mission Bay that are blueprints for what mixed uses can mean to fulfill the promise of 21st-century urbanism. Underutilized and vacant office buildings offer us incredible opportunities to unlock more units of housing and welcome new neighbors downtown.”

“Thank you to Mayor Lurie and Supervisor Dorsey for their partnership in revitalizing downtown and making progress toward solving our city’s housing crisis. This is the kind of forward-thinking legislation that San Francisco needs right now: encouraging the use of existing vacant and underutilized spaces to meet our community’s housing needs,” said Supervisor Sauter. “When people can live near where they work, take transit around the city, and shop locally, our city thrives. A strong, vibrant downtown community offers all of that and more. Building more housing downtown is good for small businesses, good for the community, and good for our city’s future.”

“The Nor Cal Carpenters Union strongly supports San Francisco’s legislative efforts to speed up the conversion of downtown office buildings into vibrant, new homes,” said Jay Bradshaw, Executive Officer of the Nor Cal Carpenters Union. “Today’s legislation will spur construction of desperately needed housing built by union workers and kickstart an economic stimulus that will positively impact all of San Francisco.”

“Cities around the country, from New York to Boston to Chicago, have identified office-to-residential conversions as a key lever to reinvigorate dormant downtown districts,” said Marc Babsin, President of the Emerald Fund. “With today’s vote to temporarily waive housing fees on conversion projects, San Francisco has taken a big step toward achieving financial feasibility of conversion projects. New downtown residents will support cafes, restaurants and retail shops and bring vitality back to our downtown streets.”

“Our office is laser-focused on finding creative ways to unlock the development pipeline in partnership with developers who are ready to invest big in San Francisco,” said Anne Taupier, Director of Development at the Office of Economic and Workforce Development. “The post-pandemic economy has necessitated that we revisit regulations that are hampering our recovery. We’re already seeing our efforts paying off and large-scale developments move forward. We are ready to sit down at the table and do more.”