Mayor London Breed signed a new San Francisco law offering over $1 billion in tax incentives to convert empty office buildings into homes. Developers get six-figure tax savings per unit. The policy could unlock millions of square feet of vacant office space, but rising property values and return-to-office demand may complicate it.
San Francisco just passed major legislation to incentivize the conversion of old office buildings into new housing developments. Over the past several years, notwithstanding changes in zoning regulations, reduced red tape, elimination of transfer taxes, and affordable housing mandates, there are still no active conversion projects near downtown. And you know there's millions of square feet of office space that could theoretically be converted. The city hasn't given up on that prospect though just yet. On February 12th, Mayor Lurie signed legislation creating the Downtown Revitalization Finance financing district, which would incentivize those conversions by offering incremental property tax revenue to eligible conversion projects in FiDi, Union Square, SoMa, and on Market Street. In total, it's estimated that north of $1 billion will be offered to eligible conversion projects, and that equates to 6 figures in savings per unit. It's a great idea, but unclear if it's actually going to get development in the pipeline because once again, office valuations are back on the rise with return to office, everything that's going on with AI and improving city conditions. But I guess only time will tell. Let me know what you think of the program in the comments and follow me for more San Francisco real estate.
