In what appears to be the first instance of a building owner seeking approval from the city under a new ordinance limiting the number of units that can be corporate rentals, the developer behind the NEMA building downtown is looking to convert 150 to 200 units.
Back when it was first completed in 2013, across the street from the Twitter building, the 754-unit NEMA complex was the poster child for Mid-Market revitalization and also extremely cringe-y marketing to overpaid tech types. That led immediately to widespread mockery and even a Twitter account called "Rent ENEMA" — playing off of the building name's unfortunate similarity to the word for an anal douche.
But in 2020, buildings like NEMA no doubt took a hit as transient tech nomads fled to Austin and Tahoe, and as the pandemic made people extremely wary of elevators and communal living of any kind. Not to mention the greater availability of cheaper, nicer apartments that cropped up all over town — in places that were not Mid-Market.
While we don't know how much of NEMA is sitting empty right now, we can hazard some guesses. The building's Availabilities page only lists 18 official vacancies right now.
As the SF Business Times reports, developer Crescent Heights would like to take between 150 and 200 of the units in NEMA off the long-term rental market and convert them into corporate housing. The complex still has 90 units designated as affordable, so that would leave around 460 market-rate apartments left to rent.
Corporate rentals were a booming business in the Before Times. The entire reason that the SF Board of Supervisors passed the legislation that requires Crescent Heights to seek approvals was that seven-story building at Church and Market that was entirely made into short-term corporate housing without running this by the neighborhood or the city. The developer there saw a loophole that allowed for units that rent for tenancies between two and six months, and charge a premium because they're furnished and companies foot the bill as a perk for new employees. That led to legislation spearheaded by Supervisor Aaron Peskin that changed city planning code to limit the number of corporate rentals in the city to 1,000, full stop.
The ordinance also caps the number of units in a large building that can be converted to corporate rentals at 20%, and requires conditional use approval from Planning. For NEMA, 20% would be 150 units.
The Planning Department has a database to track the approvals of so-called Intermediate Length Occupancy dwellings or ILOs — a term to distinguish these from short-term rentals or Airbnbs. The ILO tracker, dated as of December 22, 2020, so far has zero units approved, but that may change quickly as other developers of potentially half-empty buildings smell a coming wave of new workers, and companies that want to offer cushy incentives to get them to move to SF.
As the Business Times reports, it's not yet clear if NEMA has a partner to manage the corporate rentals. The company that was managing the Church and Market property was Sonder, which in 2019 had dozens of rentals it was overseeing in San Francisco in multiple buildings. A search today on their site for rentals between July and August finds zero results, which may reflect the crackdown that has happened since Peskin's legislation passed.