Plans to subdivided and convert 3,336 square feet of vacant retail space at the base of the Bay Tower apartment complex at 388 Beale Street into new residential units have been drawn.

If approved, the plans would yield 6 new studio apartments and a (1) one-bedroom and would be completed in conjunction with the conversion of 44 parking spaces in the 227-unit building’s podium garage into 13 new dwelling units, a project which was permitted back in 2019 and is currently underway and would result in the complex totaling 247 units and 184 parking spaces if the retail conversion is approved and completed as well.

And while a conversion of the building’s retail space would be able to leverage the existing fire safety, systems and other residential requirements that already serve the building, the infill construction of the 7 new apartments would cost an estimated $2.7 million or roughly $700 per new residential square foot which doesn’t account for the cost basis of the space which UDR acquired a decade ago.

18 thoughts on “A Retail to Residential Conversion in the Works”
  1. … how a conversion wouldn’t pencil for the vast majority of vacant commercial buildings in San Francisco

    ergo: this must be one of the tiny minority that do (so we can hardly accuse of “cherry picking” w/ the data set so small).

    But we asked for it, and now we’ve got it: I’m sure we’ll all look forward to trading ideas on why this conversion worked out.

    1. Thousands, tens of thousands, possibly millions. This part of downtown will become a parking spaceless hellscape. Drivers will circle the block for days, searching for a parking space, children will starve as their parents become trapped, unable to find the parking they so desperately need. New condos will continue to rise, none with parking, and new residents will bring their cars, continually adding to the crush of unparked cars forever circling the block…

      1. This push against parking spaces and cars is well intentioned, but severely premature. Just like the foolish push to dump all things oil & gas — right *now* — even though a viable, scalable, carbon-free solution does not exist.

        I am a huge public transit fan, I don’t own a car and try to take the bus/rail as much as possible. But I am also a single male. I’ve been on the bus multiple times where children are being screamed at by deranged homeless people, and in one recent instance, saw a woman get physically assaulted waiting for the 49. If I had a family, I don’t know how comfortable I would be taking all of them places on the bus.

        The city needs to clean up the streets and make the bus system feel more safe. Even me, a tall male, feels sketched out riding the 5, 38, or 49 after 7pm.

        People still have cars, and until a point in the future where car ownership rates start dropping significantly, it makes little sense to remove infrastructure supporting cars. It will come back to bite, as we are seeing with gas prices in this country.

        1. I do agree that we should make more of an effort to make people feel safe in public, including children (and even including non-aggressive crazy homeless people, who are probably the most likely to suffer from the antics of aggressively crazy homeless people).

          But our choices about construction are going to be with us for decades. Building a bunch of parking garages now to “solve” the problem of deranged people is just nuts. It won’t solve the problem, it’ll create other problems, and it costs a lot.

          In the short term, it may mean that the new units aren’t filled by families but by roommates, or that the new units won’t sell for as much as they would otherwise. But that’s something the city (we) can work on.

          1. You’re misunderstanding. Yes, our choices about construction are going to be with us for decades, but San Francisco’s homeless problem has not only been with us for decades, but has been getting steadily worse for decades.

            I think you’re correct that we probably shouldn’t be building a bunch of new parking garages, but we should certainly not be getting rid of existing ones to create overpriced luxury housing that the people already living in San Francisco won’t be able to afford.

      2. Oh, dear, such emotion. I just kinda like my bureaucrats to understand what’s actually happening. Better policies result.

  2. Something had to give as retail and office vacancies remain high. That will get better but there will not be a return to pre-pandemic levels of office workers downtown. By a long shot. Mayor Breed and several companies touted a return to SF event yesterday. The big takeaway is that, as these companies return force to the downtown, it will be a hybrid model. 2/3 days remote work. That means a big dent in the weekday downtown population. A 3/2 – office/remote work model means a 40% decrease in workers over a week’s span. That is huge. Now some companies will disallow hybrid work, but some will allow total remote work. To that end, as companies settle on a permanent hybrid work model, there will be a new wave of downtown office space being put out for sublease as companies won’t need the footprint they once did. Watch for the DTSF office vacancy rate to tick upward over the next few years.

    The conversion of retail space to residential should be fast tracked by the City. There will be issues. In this case the potential units’ front windows are at street level. The streets are nasty still in this area at night. Some type of setback will be needed. Maybe high gates around a 4 or 5 foot landscaped buffer. Still, this is definitely a move in the right direction.

    1. I’m all for flexibility of space, but it seems wild that spaces like these aren’t in demand for, well, something, with hundreds of residents directly above them.

      I wonder what asking rents are for commercial vs residential space. From what I’ve read, commercial spaces in some areas can go for crazy high rents, many times more than residential. Now, that’s very location-dependent, I’m sure, but it seems surprising that there’s no demand for a commercial space in this location at a rate similar to what they’d get for residential.

      As far as WFH reduction in office space goes– this may be true, but you assume that the number of businesses/employees remains constant. If everyone switches to 3/2, and a bunch of space opens up, it means that there’s now room for significantly more businesses/workers. Vacancy leads to lower commercial rents leads to city being more attractive for various kinds of business, and you can easily imagine the same total number of people commuting in on BART, just that now it’s different people every day instead of the same people five days a week.

      1. The problem is that there are 20 million feet of empty space (22.5% vacancy per SFBT) and no one is lining up to fill that space. A potential new wave of sublease space is set to hit SF as these hybrid work models are implemented and companies reduce their SF footprint.

        1. Apparently we have to explain to Alai why no one is lining up to fill that [retail] space. After reading this sentance:

          Vacancy leads to lower commercial rents leads to city being more attractive for various kinds of business

          You have to realize that they apparently have spent too much time having capitalist propaganda pounded into his/her head, and actually believes that the local commercial real estate market responds efficiently to the laws of supply and demand that the chain yankers on these comment threads insist are as inviolable as the laws of Newtonian physics.

          Alai, try looking around you in actual, real world San Francisco for a change. There is all kinds of commercial space that’s been sitting vacant for years on end available. To put it into Econ 101 terms you can understand, while there might be sufficient demand, prices have not adjusted downward to the point where the market will clear. Maybe your Econ 101 instructor didn’t cover market failures.

          You’re correct “that there’s now room for significantly more businesses”, but not at the prices landlords and/or owners are willing to accept, so the properties sit there, vacant. You might ask why. Well, the use of leverage. Lenders for these properties have agreements with the owners setting a floor on acceptable rent amounts.

          So just assuming that “vacancy leads to lower commercial rents” is just incorrect in the real world even if it’s correct logical deduction from first Econ 101-type principles.

          1. Well maybe at some point the owners will get tired of losing stupid amounts of money, and sell the property to someone who isn’t bound by such ridiculous restrictions.

  3. Average size of each new unit: 476 sf. Less, actually, as that’s calculated from the total size of the vacant retail space. Walls and presumably a corridor will suck up quite a bit. So maybe 450 sf average. That probably means 6 400 sf studios and one 750 sf one bedroom, something like that. I guess those are passable but certainly not spacious.

    But it’s the windows (and doors) right at street level that give me pause. You’d probably need curtains drawn 24/7 or some kind of non-transparent glazing. Yuck. Kind of the opposite of activating the sidewalk. But I agree that it makes sense to convert some excess retail space to housing, and so I have a hard time criticizing the project, I just wouldn’t want to live in one of those units.

    Most multifamily operators don’t really want to be commercial space landlords anyway; it’s not their wheelhouse, they see it as a distraction or a nuisance and it’s one of the reasons a lot of that space doesn’t get filled. So I imagine the building’s management will be delighted to see that nuisance space turned into products they know how to sell.

    1. Close but not quite with respect to the average size of the studios (which would actually average a little over 500 square feet apiece with lofted second levels while the one-bedroom, which would be lofted as well, would measure 715 square feet). But that’s a BINGO with respect to why this conversion, under these conditions, makes sense.

      1. Well that’s annoying. The loss of active streetfront uses is a real loss to the city, and if the reason is that the managers just don’t want to be bothered, well, that’s not a very good reason.

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