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Posted May 7, 2022, 3:06 AM
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Registered User
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Join Date: Dec 2016
Location: San Francisco
Posts: 24,177
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Quote:
Originally Posted by whitty
Is it the size of Parcel F that's delaying it? The hotel component? The specific lenders/investors/developers, and their appetite for risk? Both Parcel F and 30 Van Ness are mixed use, so you'd think the housing component could help bouy both projects the same.
Intersting to see 30VN speed ahead after seemingly being planned much after Parcel F kicked off planning.
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Quote:
‘Projects are just dying’: Applications for new housing in San Francisco hit a new low
J.K. Dineen
May 2, 2022
Updated: May 2, 2022 1:35 p.m.
The flow of applications coming into the San Francisco Planning Department for new housing developments has slowed to a trickle so far in 2022 with just three projects totaling 62 units being processed during the first four months of the year, according to the city’s database of preliminary project applications.
While a four-month dry spell in applications could be an aberration — planners are expecting several large projects to be submitted in the next few months — developers and construction industry leaders say it reflects the reality that high construction costs, inflation, rising interest rates and a slower-than-expected pandemic recovery are giving pause to lenders and property owners who might otherwise be lining up future developments.
The dearth of new projects represents a significant drop from past years. In the boom year of 2015, city planners processed 17 applications totaling 2,084 units during the first four months of that year. The next year it was 18 projects representing 1,873 units in that same time frame. Even a year ago — when the virus was near its peak — there were seven preliminary project applications totaling 891 units in the same four-month period.
Because it takes five years to entitle and build multifamily housing in San Francisco, the current lack of interest in new projects will not impact how much new housing the city generates in the next two or three years. But if the number of new applications coming in doesn’t jump in the coming months San Francisco could feel the slowdown in 2025 and 2026.
Ross Edwards, CEO of Build Group, one of the largest construction companies in Northern California, said his company has large new projects going forward in San Jose, Santa Clara, Sunnyvale and elsewhere, but that the San Francisco developments are mostly stalled.
“The bottom line is people are not starting new projects in the city,” he said. “The market that is really hot right now is San Jose — everyone is focusing down there.”
The fact that fewer San Francisco workers are returning to the office than almost any other major metropolitan area — combined with the national media’s focus on the city’s dirty streets and open air drug dealing — is having a chilling effect on the lenders who typically finance multifamily housing, Edwards said. Add soaring inflation, political hurdles and high fees and many builders are avoiding the city, he said.
“There is nothing that is better right now than it was two years ago,” Edwards said. “Everything is worse. Projects are just dying of their own weight.”
Chris Foley, a veteran city broker and developer who is in the early stages of planning a major residential project at 620 Folsom St., said, “the fact is that you can’t build anything right now.”
“You are looking at $1,000 to $1,100 a square foot in hard costs alone — that’s not even including fees or land values,” he said. “That is the harsh reality.”
Planning Director Rich Hillis said that the number of projects coming in for entitlement has dropped, but that a four-month sample size is not a long enough period to draw any conclusions.
Hillis called the current climate “a mixed bag” for housing construction. Several of the larger multiphased “mega-projects” are picking up steam, including Treasure Island, where 1,000 units could be completed or under way by the end of this year, and Mission Rock, where the San Francisco Giants and Tishman Speyer are putting up apartment buildings and a headquarters for Visa.
. . . major projects remain stalled, including a 6,000-unit expansion of Parkmerced, 12,000 units at the Shipyard and Candlestick Point, and 1,679 units at Schlage Lock. In addition, the 8,550 units expected to be generated in large projects along the future Central Subway are all stalled.
Planning Department Chief of Staff Dan Sider said the focus has been on getting projects as ready as possible, even if developers are hesitant to start work. The city has about 70,000 units in its pipeline, about 10,000 of which are in “preconstruction,” meaning they could get going quickly under the right circumstances.
“We have been building up a reserve of entitled projects so that when things are back to normal and the economy loosens up people are ready to put a shovel in the ground,” Sider said . . . .
Housing Action Coalition Executive Director Todd David pointed to the Board of Supervisors’ rejection of 500 units at 469 Stevenson St. as a factor in why housing developers seem less active in the city. “If you are a housing developer why would you risk the uncertainty and the cost and the San Francisco craziness?”
David said the city would have to lower fees in order to lure back developers. “We can not solve every societal ill on the backs of housing developers and expect housing to get built. We need to figure out how to rein in those costs.”
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https://www.sfchronicle.com/sf/artic...s-17135343.php
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