San Francisco Mayor Mark Farrell and Supervisor Aaron Peskin think they have found a solution to a problem posed by Proposition M, a 1986 cap on development that threatens to block millions of square feet of new commercial space South of Market.

The fix, which has the potential to usher in high-profile projects like the new San Francisco Flower Mart at Sixth and Brannan streets, has its roots in a short-lived real estate trend that swept the city in the mid-2000s: a rash of conversions that turned older office buildings into residential condominiums.

Peskin and Farrell are co-sponsoring an ordinance that would allow office space converted to residential use to be reallocated as commercial space available to be developed — about 1.3 million square feet. The law, which will be introduced at Tuesday’s Board of Supervisors meeting, would need their approval but would not have to go before the voters.

Prop. M, which voters passed to stop the “Manhattanization” of the Financial District, limits the amount of office development the city can approve to 950,000 square feet a year. The space under the cap accumulates during economic downturns, when there is little incentive to build, but is quickly gobbled up during boom times, like the current one, when developers are crawling over one another to create homes for companies willing to pay fat rents — upward of $100 a square foot — for new space.

Currently there is about 2 million square feet of space available under the cap, with another 950,000 square feet to be added in October. While that may seem like plenty of space, it’s not nearly enough to accommodate the 6 million square feet of pending projects, nearly all of which are located in a part of Central SoMa that is being rezoned to allow for the next generation of San Francisco offices.

Adding the 1.3 million square feet of space that had been wiped out because of conversions to residential uses would offer some breathing room over the next six months as the Central SoMa plan is approved and the individual developments come up for approvals.

The looming crunch had sparked a showdown among several major developers who all have projects planned in the neighborhood, even to the point of possible ballot measures to make sure theirs was first in line.

“Ultimately, this is a simple solution to avoid a head-on collision and allow some of the most significant developments in San Francisco to move forward,” Farrell said Monday.

In particular, the extra space would allow two high-profile projects to move forward: Kilroy Realty’s Flower Mart, which will consist of 2 million square feet of offices on top of the flower vendors, and Tishman Speyer’s 598 Brannan St., which would include a 38,000-square-foot public park, 91 affordable housing units and 72,000 square feet of industrial space.

Buildings that morphed from office space to housing include the former Call building at 74 New Montgomery and the Royal Insurance Building at 201 Sansome St. In addition, there were offices at 733 Front St., 690 Market St., 1 South Park St., 310 Townsend St., 83 McAllister St. and 1 Powell St. that have been converted.

Peskin said he remains a fan of Prop. M, which he said has protected San Francisco from “the boom-and-bust cycles” that in other markets have led to empty office buildings during downturns.

But he said the projects in Central SoMa — an area bordered by Sixth, Fourth, Market and Townsend streets — come with more than $2 billion of neighborhood benefits, including parks, affordable housing and transit improvements. Before his current stint as a supervisor, Peskin helped negotiate the deal between Kilroy and the wholesale flower vendors.

“Prop. M never contemplated the fact that some existing office buildings of that day were converted to housing,” Peskin said.

Farrell said he was concerned that Prop. M would endanger crucial housing and the city’s capacity to expand its economic base “During my time as mayor, the Central SoMa rezoning is far and away the most important development deal,” said Farrell, who was appointed by the Board of Supervisors in January and will leave office after Tuesday’s special election is certified. “And the biggest hurdle from our point of view was the potential for infighting around the Prop. M allocation.”

Land-use attorney Sue Hestor, one of the original sponsors of Prop. M, said that she is open to the idea.

“I’d be OK with entering into the conversation, as long as it’s not a one-sided conversation with developers.”

Terezia Nemeth, senior vice president of Alexandria Real Estate Equities, said the legislation makes sense. Alexandria is redeveloping the San Francisco Tennis Club at Fifth and Brannan streets, a project that will include affordable housing and a public swimming pool in addition to office space.

“The city is being consistent in their approach by recapturing space that has been converted,” she said. “It’s a housecleaning, as I see it — perfectly consistent policy.”

The Central SoMa plan, which totals 5.5 million square feet of office space, is expected to be approved by the Board of Supervisors next year. Property owners in the area have proposed 5.5 million square feet of new office construction.

J.K. Dineen is a San Francisco Chronicle staff writer. Email: jdineen@sfchronicle.com Twitter: @sfjkdineen