Ask an Expert (Caroline Kahn Werboff), better to have SFR or 2 Units in Cow Hollow

Hi there:
I own a two-unit, two-story building on a lot that is 45 feet deep in Cow Hollow, in an area bounded by Union, Pierce, Chestnut and Buchanan Streets. I am trying to decide whether or not to try to merge the units legally into a single dwelling unit. It is clear that the process is complicated and not a slam dunk (in fact, the City is currently considering making it even harder to merge units) but it is still pretty tempting to try. What I would like to know is, is the building overall worth more as a two-dwelling-unit building, or would it be worth more as a single-family home? Is the answer to this question likely to change over time? Please assume that I have no tenants in either unit for the purposes of this question.
A short description: each unit is approximately 850 square feet. There are three small-ish rooms in each unit, plus a single unrenovated bathroom and a kitchen. The house was built in the early 1900s. There is a full basement under the structure.
Two things I forgot to add in my original letter are (i) that the house is located on an “alley,” and (ii) that there is no garage. Don’t know if that matters or not.
Thank you for your help!-DK”
As answered by Caroline Kahn Werboff of Hill & Co. Real Estate,

Dear DK,
In my experience, it may be valuable to investigate putting a 2nd unit in the basement area if it is appropriate to do that, and combine the two units. Then you have a single family with an additional unit. That is the highest and best use if it is feasible.
Good luck,
Caroline Kahn

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