Downtown S.F. Joins Slow-Growth Ranks

Most “slow-growth” initiatives have been aimed at controlling residential growth, but in San Francisco the focus has been on reducing the number of new downtown office buildings.

Between 1979 and 1984, 25 million square feet of office space was built, a spree that created a forest of high-rises, all but obliterating the sun in the canyons of the downtown financial district.

Many were built with no special tenant in mind, and many were flawed by poor architecture and shoddy construction.

Several previous attempts to curtail the size and number of new office buildings failed, but in 1986 San Francisco voters approved Proposition M, which limits new office space to 475,000 square feet per year for the next several years.

Proposition M also called for preserving “existing housing and neighborhood character,” which has led to a freeze on demolitions of single-family houses and duplexes in some communities.

Proposition M succeeded where other measures had failed, said Calvin Welch, one of the campaign leaders, partly because environmentalists who were concerned about building design and other aesthetic considerations joined forces with community organizers, who saw that downtown high-rises were causing congestion and air pollution, forcing up rents and housing prices, while not providing enough jobs for lower- and middle-income people.

Another reason for the measure’s success is that “we’ve been educating people for an awful long time,” said attorney Sue Hestor, another campaign leader. “We attended every hearing. . . . We got information from the city they didn’t even want to give us. . . . We held teach-ins all over the city.”

It is too early to say how effective Proposition M has been because many buildings were “in the pipeline” when the initiative passed and still are being finished, said George Williams, the city’s assistant planning director.

While the number of new office buildings has been reduced, “it is hard to tell if this is due to ‘M’ or to the glut of overbuilding that went on before,” said Mark Weinberger, a San Francisco attorney who represents slow-growth forces throughout the state.

Some are making dire predictions.

“The window is closing on the tenants’ market of the past several years as we see rents going up, particularly in the most desirable locations,” warned William J. McCubbin, senior vice president of the large Grubb & Ellis real estate firm.

But downtown space is still leasing for about $25 a square foot, well below the $35-$40 prices that marked the building boom of five or six years ago.

And Grubb & Ellis figures show a downtown office space vacancy rate of more than 13%.

But the crunch is coming, according to Williams.

With vacant office space being absorbed at a rate of 1.6 million square feet a year and only 475,000 square feet being built annually, “we’re going to work through the inventory pretty fast,” Williams said. “We should really begin to feel the bite around 1991.”

When that happens, Williams predicted, either Proposition M will be changed or companies will go elsewhere in their search for office space.