Starboard Commercial Real Estate

Hans Hansson | December 20, 2005

In the early 1970s, San Francisco Mayor Joe Alioto set forth a vision of developing high-rise office space so the city could compete to become the West Coast home for the financial services industry. The mayor was accused of beginning the "Manhattanization" of our city.

In the early 1980s, in an attempt to avoid an exodus of businesses to new, large office parks in the East Bay and Los Angeles, San Francisco began the development of office buildings in the area known as South of Market. Many critics believed that this development would turn San Francisco into a mini-New York at the cost of its manufacturing- and industrial-service-based businesses.

In the late 1980s, as the nationwide office market faced collapse, Alvin Duskin led a successful drive to enforce office building development size and height limits, while also establishing the need for "beauty contests" to determine the viability of projects in terms of need and design. This was all in the hopes of stopping the further Manhattanization of our city. The tallest building at this time was the Bank of America building, at 52 stories.

In the mid-1990s, Mayor Frank Jordan pinned his hopes on having San Francisco become the leader in a new-age dream called the Internet and the World Wide Web. He helped established special districts, known as SLI and SLR, that allow for the conversion of warehouse and industrial space to office space. In his attempt to attract high-tech firms, Mayor Jordan managed to bypass the early Proposition M and office building development limitations.

Today there is the announcement of the impending construction of two residential towers-44 and 55 stories-on Rincon Hill. These two towers will change the San Francisco landscape, extending the skyline of high-rises down South of Market. The 55-story residential tower will be taller than our tallest office building.

Facing the prospect of a tremendous boom in property tax revenue, the city seems to have disregarded concern for its overall infrastructure. The city supervisors' response to these developments has been to look at new ways of taxing citizens and visitors, for example, with a FastTrak type of charge on certain streets to eliminate congestion.

As a native San Franciscan and someone who is in the real estate business, I favor development. However, I am concerned about the effect of these residential developments on the city's office and industrial needs. With declining office and industrial vacancies and an aging inventory base of buildings, San Francisco needs to continue to support office and industrial development. Creating new housing is an admirable goal, but to support housing, the job base needs to continue to grow. That is not possible without a competitive commercial market.

I am also concerned that condominiums do not provide housing opportunities for families. The Mission Bay development originally included low-density family housing, but single-family or low-density family housing is not a developer's best option for maximizing investment. It is also not the city's best option for increasing property tax revenue.

As a city we need to be proactive, not reactive to our long range planning. We need to also address the lack of single family homes & lack of warehouse space as two areas that would have a serious impact on our infrastructure if we do not facilitate new growth in these sectors.
Posted 14 years, 2 months ago on December 20, 2005
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