An ordinance passed to change the city’s codes to relax rules for conversion projects has had little impact thus far.
So what are other cities doing that San Francisco is not?
Washington, D.C., sits atop the rankings with 5,820 conversion units currently in the pipeline, compared with only 150 units across the entire San Francisco Bay Area, according to Yardi data.
The nation’s capital was more proactive in passing tax breaks, making development more profitable for real estate investors, according to Doug Ressler, manager of business intelligence at Yardi. Washington Mayor Muriel Bowser helped spearhead an expansion to a 20-year tax abatement for conversions as part of her 2024 budget plan.
New York, which came in second in office-to-residential conversions with 5,215 units in the pipeline, launched an Office Conversion Accelerator, which has enrolled more than 50 buildings in a program to give developers a single point of contact to provide expedited zoning and permitting reviews.
In some situations, it can come down to the types of buildings that are available, said Ressler. In Los Angeles, for example, a single developer, Jamison Realty, is pursuing the bulk of the city’s residential conversions. Rather than selling off projects for redevelopment, Jamison is working on transforming properties it already owns. Most of its projects are office buildings that have been vacated or are struggling with occupancy.
Family-owned Jamison was founded by a South Korean immigrant, David Lee, who made his name buying up struggling office towers after the 1992 L.A. riots. In 2013, his family began experimenting with office-to-housing conversions and has since carved out a lane as experts.
“Jamison was doing those irrespective of what the local government was up to,” said Jason Ward, a RAND Corporation economist who has researched the feasibility of commercial-to-residential conversions.
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