By Zain Jaffer : sfexaminer – excerpt

The San Francisco Bay Area, just like many parts of the United States, is suffering from a housing shortage, aggravated by construction pauses brought on during the COVID-19 pandemic and the Federal Reserve’s interest-rate hikes of the last few years.

It’s only natural to consider converting some of the vacant office spaces and buildings dotting The City’s skyline to residential use, mainly because they are already there and are a negative weight to many bank and real-estate company balance sheets because the forecast rental incomes aren’t showing up.

A 2023 SPUR research paper claimed that empty downtown San Francisco offices — extending from the Northern Waterfront to Mission Bay — could accommodate more than 14,000 homes. But why are there so many vacant office spaces? It’s worth breaking understanding what makes up The City’s commercial real-estate stock…

Often, it’s better to simply demolish an older building that already has zero book value — or fully depreciated — for the underlying land and build a new residential building. Higher commercial-property taxes need to be adjusted for residential rates, plus there are transfer taxes and recertification costs, all aside from rebuilding costs….(More)