US: San Francisco Mid-Market NEMA building requests approval to convert 150 to 200 units to corporate rentals.
The NEMA building, which was completed in 2013, has 754 units, and is across the street from the Twitter building. When the building opened, it was marketed towards people working in tech and was also the topic of internet mockery.
The official status of how many units are vacant in NEMA is unknown. The website only lists 18 available rentals, but buildings like NEMA were hit hard during the pandemics. Many people left the city to go to places like Lake Tahoe or Austin, leaving vacancies in city apartment buildings.
Developer Crescent Heights would like to remove 150 to 200 of NEMA’S units from the long-term rental market and turn them into corporate rentals. The building still has 90 units that are designated below market-rate, so this move would leave 460 rentable market-rate apartments. It is unclear if NEMA has a partner yet to manage these rentals if approved.
In order to transform the units, Crescent Heights will need approval from the city due to a new ordinance limiting the capacity of corporate rentals. This ordinance came about when Sonder managed a property in the city that was completely converted to short-term corporate housing without talking to the city first. The developer of the building saw a loophole that allowed this practice, which led to legislation led by Supervisor Aaron Peskin to prevent further conversions to corporate rentals in other buildings.
Peskin said: “If there is a role for these types of units in our new market rate housing, they should be documented and regulated appropriately. In our rent-controlled housing stock, though, I think these corporate rentals really have no place.”
The new legislation put a limit on the number of corporate rentals in the city to 1,000 and limited the number of units in a large building that can be converted to corporate rentals at 20 per cent. In the case of the NEMA building, 20 per cent of its units would be 150 units.
The city refers to units of corporate rentals and other similar concepts as Intermediate Length Occupancy dwellings, also known as ILOs. The planning department keeps track of these ILOs in a database. According to the ILO tracker, which dates to December 2020, no new units have been approved for corporate housing.
Currently, the availability for corporate rentals is very low. Even Sonder, who managed many properties before the legislation, displays no availability for the summer months on their webpage.
