Elias: Office conversions wave of future, present in California, elsewhere

Conversions of millions of square feet of unused office space to dwelling units are starting to take off all around California Except that is in the state s densest city San Francisco Related Articles Elias California s Disney shows that its profits come before principles Elias Constitutional convention Why exactly open Pandora s box Elias Consumer issues likely to plague long recovery from L A fires That s likely to change soon though with Wells Fargo Bank s longtime headquarters building now for sale along with two largely-unused office towers the federal regime seeks to dispose of All three skyscrapers are among obvious candidates for repurposing in a local office industry where more than one-third of the city s existing space is unused That s in spite of moves by certain high-tech firms to force workers back into offices fully five years after they were narrated to begin working from home during the depth of the COVID- pandemic Moves to compel highly skilled white collar workers back into offices full-time have not worked well because a great number of workers unveiled they like home offices better than cubicle-filled spaces that lack soul Also contributing to resistance the fact that a healthy share of workers took advantage of work-at-home edicts to move their homes to less expensive locations with more open space than San Francisco and Silicon Valley can offer The net development was a rash of resignations sending a message to executives who backed off a bit and have until in recent weeks usually only urged workers to come in at least one or two days per week not full-time Meanwhile the office space conversion bandwagon appears to be gaining speed in various markets Nationally the number of apartments and condominiums converted from office space reached a record high of units last year up from about the previous year The newer figure was developed by the RentCafe website which has tracked this phenomenon from its start Across California apartments of varying sizes were in the conversion pipeline as of March this coming after about converted units went on the territory last year These units provide ongoing income vital to the bottom lines of real estate assets trusts REITs that have long concentrated on high-rise commercial properties It s vital because majority of REITs saw their share values drop precipitously during the pandemic and have not since come close to recovering from the lost or reduced leases they suffered during the main COVID years Now Los Angeles which saw about units converted in the first scant years of this trend has apartments in the enhancement pipeline enough space for about residents given California s average household size of persons Smaller cities have also become ongoing in conversions since state legislators passed a couple of laws in making it easier for such projects to get building permits Long Beach now has units permitted double the number in San Francisco where demand for apartments dropped when the city lost population as sent-home workers moved to cheaper digs in distant towns like Tracy and Petaluma The soon-to-be-available office towers seemingly begging for conversion might spark interest from young professionals though who fancy living in the city s downtown Goleta near Santa Barbara now has hundreds of conversion apartments in its pipeline outpacing San Diego where the idea has not yet caught on That certain major markets have not yet adjusted to the new state-mandated permitting processes is clear but when that inevitably happens in places like San Jose and Fresno living in converted office space promises to become a Generation Z fad That s because units converted from office space are far cheaper to develop than new construction while also leaving the character of neighborhoods intact and traffic flowing at previous levels rather than causing new crowding The number of units now completed or underway debunks naysayers who claimed when the idea first arose that conversions would be more demanding to get permitted than new buildings That was never true but is especially false since passage of a state law making permits administrative with almost automatic approvals The bottom line Office conversions first recommended by this column in April are now the wave of the present and future in California and multiple other places They can also be a boon to first-time home buyers renters and current building owners Email Thomas Elias at tdelias aol com and read more of his columns online at californiafocus net