How Bay Area cities are converting old hotels and schools into housing

The next in-demand apartment could be inside an old Bay Area school, church or hotel.

Why it matters: As developers and cities like San Francisco seek to repurpose empty space into much-needed housing , a mix of building types are on the table.

State of play: The San Francisco metro area, which includes Oakland and Berkeley, recorded the fourth-highest number of conversions to apartments in 2023 at 552, according to a RentCafe analysis .

• That's primarily due to the conversion of a former warehouse property in Alameda County, which created 372 new apartments.
• Other Bay Area cities have also explored their options with the redevelopment of retail spaces , an old convent , a defunct medical center , a former California College of the Arts campus and more.

The big picture: Businesses closing or downsizing during the pandemic created many vacant commercial spaces, sparking a surge in conversions.

• Former offices and hotels dominated the national trend in 2023, comprising 28% and 36%, respectively, of newly completed projects, per RentCafe's study .
• Former schools accounted for 3% of U.S. apartment conversions, data shared with Axios shows.

Reality check: Conversions in general are complex, expensive and often hampered by local building restrictions.

• Even if a project clears the SF Planning Department, it can face hurdles with issues like seismic retrofitting, building codes and plumbing — especially if the facility is older or has structural problems.
• In March, voters approved Mayor London Breed's proposition to incentivize office-to-hotel conversions by transferring tax exemptions the first time commercial buildings are sold to new owners for residential use.
• The SF controller's office has predicted, however, that the incentive would likely be too small to close the financial feasibility gap.

What they're saying: Transforming empty buildings into affordable housing "would require significant changes from the city's planning department and the state's building codes," Kevin Riley Jr., a Bay Area architect who works on multifamily housing, told Axios via email.

• "Costs are already incredibly high."

Yes, but: The projects are "a testament to sustainable design," preserving buildings' heritage while minimizing the environmental impact of demolition , says Doug Ressler of real estate research firm Yardi Matrix.

Between the lines: Several factors contributed to historical jumps in school conversions since 2000, including declining enrollment in some school districts and heightened interest in city living and historic preservation, according to RentCafe.

• The 2008 financial crisis also led more developers to consider repurposing existing buildings like schools to reduce construction costs, research analyst Veronica Grecu told Axios.
• Conversions later picked up in the 2010s, partly because of new financing incentives and the increasing need for affordable housing options .

What to watch: State and federal historic preservation tax credits can incentivize flips of some properties, researchers say .

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