Conversion of Offices to Housing Simplified Under Proposed California Bill

The pandemic forced several companies to shift to remote work leaving many office buildings vacant. Although some have now returned to office, working from home remains popular and companies are choosing to minimize their footprints. Major cities in California continue to experience record or near-record office vacancy rates, including the Bay Area. According to CoStar data, office vacancy is 12.6% in San Jose and 17.9% in San Francisco.

Across the country, there is less demand for office space but an increase in demand for housing. This has pushed conversions of underused office buildings to apartment units. The state of California has proposed a new bill to ease the process for these developments.

The “Office to Housing Conversion Act” (AB 1532) would prevent local governments from hindering conversions of office spaces to residential units. Under this bill, applications would need a response from city councils, county boards of supervisors, and/or planning departments within 90 days of submission to prevent unnecessary delays. The bill would also eliminate any imposing fees and allow conversions to proceed despite city zoning laws in some areas. The “California Downtown Recovery Catalyst Fund” would be created along with the proposal to allocate grants for these projects. A portion of the units created will be dedicated to low or moderate-income families.

The California Business Roundtable plans to meet with the author of the bill, the real estate industry, and others to adjust the language of the measure and make it more workable. Executive vice president of Sacramento-based California Business Roundtable, Brooke Armour, believes the bill would be a great step in helping the housing shortage in the state of California. 

The shortage has contributed to high rents in the Golden State, with nine cities ranking in the top-15 for highest apartment rent in the country and San Francisco taking the number one spot. While these office conversions seem to be a fix for the housing deficit, it is costly. Developers also face design issues in these projects, such as operable windows and office locations. These issues have prevented many conversion projects across the nation.

The bill is still in its early stages and would need committee policy approval for next steps.

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