They responded to that in the article. If you live in San Francisco you should contact the board of supervisors and give them the quote from within the article that permit fees and other costs put the conversion costs well over what the owner could recover.
With the article's $1000/sqft conversion cost estimate, the developer could provide free catered meals for life instead of adding kitchen space to each unit.
Some of that cost isn't really waiveable. Commercial spaces aren't residential spaces. For instance, I've heard that commercial buildings generally run the pipes only up the middle of the building, since they can centralize bathrooms and kitchens. Residential space is not generally so amenable. Residential spaces need other heating setups. Residential spaces have different load characteristics based on where the furniture goes. There's a lot of real differences between commercial and residential buildings, and just like with computer code, as you scale up the building minor differences a single-family home owner would ignore become significant differences become vast differences.
In theory you could go all Mad Max and give them permissions to just start throwing up walls, creating spaces with communal bathrooms, and just dealing with it, but the amount of regulatory work to do that is pretty substantial. Even if you could get the agencies to agree to it in principle, a massively uphill battle since you're basically asking them "Hey, will you agree that you and your mission are worthless and irrelevant inside my building and pretty please promise to not worry about whether other people will start asking questions about what exactly it is you do (including the legislative bodies that provide your budget) and why it is they have to conform but I don't?", they'd immediately start putting their fingers back in the pie anyhow.
It really isn't financially feasible. HVAC is different. Electrical loads are different. Plumbing is different. Sewer is different. Requirements for elevators are different. Life safety is different. Huge chunks of the building would be unlivable because they'd be on the interior with no windows.
To meet even the barest of code requirements you'd basically have to gut the building and redo almost all of it. And SF requirements are hilariously strict and complicated.
Of course it can be done, but if you think renting to businesses is hard, try renting at >$75/sq. ft. A 1200 sq. ft. apartment would be $7500/mo. The only people who can afford that are high-paid technology guys, and their job has already left SF for Texas or wherever.
"To meet even the barest of code requirements you'd basically have to gut the building and redo almost all of it. And SF requirements are hilariously strict and complicated"
The guy who turned the DNA Lounge from a Bar into a Bar has a tragicomic blog detailing the journey.
If he weren't a Mozilla multimillionaire it would have been ludicrous to even try.
Almost all of the cost isn't waiveable unless they are willing to hand out huge subidies to redo everything about those buildings in addition to going "mad max" as you eloquently put it. That would be politically untenable, since it would be seen as a "subsidy for the rich."
If I was to nitpick, I would only say that load is unlikely to be a problem: walls are usually configurable in office spaces, and floors should be able to handle stuffing a data centre in the middle as well.
It depends on the building. A three story brick & concrete building may be able to handle a data center on the top floor. As you get into the 80 floor skyscrapers you're getting into buildings where you have to start worrying about exactly how they wave in the wind, something I don't tend to think about at all. Trying to stick a datacenter on the 75th floor there may be a noticeably bad idea. Scale isn't just an issue for programmers.
Definitely the right solution in my book, but conversions are going to take a lot of time both from the side of government regulation changing to allow it and just in terms of the physical construction work needed.
