San Francisco's new housing fix could push more companies out
Companies are already having a tough time finding enough office space in San Francisco and are decamping for lower-cost locations. A ballot measure that seeks to address the city's affordable housing shortage could send more of them packing.
In March, city voters will decide on Proposition E, which would tie limits on office construction to the city’s progress on its affordable housing goals. If there's a shortfall in building new lower-cost residences, developers won't get to build as much office space. The idea is to boost housing production in a city where job creation has far exceeded residential development for years.
The proposal, which could strengthen existing restrictions on office projects, may drive up the city's sky-high commercial rents and push more companies to other Bay Area cities, according to a new analysis from Green Street Advisors.
If the measure had been on the books since 2007, it would have reduced the amount of office space allowed by about 30% a year, Green Street estimated.
"The difficulty for office tenants to expand in San Francisco from both a cost perspective and from a sheer lack of availability may force them to look elsewhere for office space," Green Street wrote, noting that the payments company Stripe Inc. recently decided to move from the city to South San Francisco.
John Elberling, who sponsored the initiative, recently told CityLab the idea is to turn office developers into advocates for affordable residences in one of the most expensive cities in the U.S.
"Either we're going to significantly increase our affordable housing or reduce our office development," said Elberling, who runs the housing nonprofit Todco. "It's going to be one or the other."