city in the United States, and it’s growing denser, more affluent and more expensive.
The charts included are mostly based on the San Francisco Planning Department’s excellent Housing Inventory and Pipeline reports, which can be accessed using the links at the bottom of this article. Quotes below are excerpted from these reports.
Packed with information, the data in one report section will not always agree perfectly with that in another – due to the multiple sources of data used by the Planning Department – and this is reflected in our charts as well. In the complex, lengthy process of new-housing application and review, public hearings (and, lately, ballot proposals), revisions, entitlement, permitting, construction and completion, how and when a project is counted may vary. Housing units are being built and being removed, and there are so many types: rental or sale, market rate or affordable, social-project housing or luxury condominiums.
Last but not least, this landscape is in constant flux – new projects, plan changes, and shifts in economic and political realities. Everything below is simply a good faith estimate. The basic reality is that San Francisco, after its recent 2008-2012 new-construction slump, is now experiencing a building boom. So far, however, it has not been able to keep up with population growth and rising buyer/renter demand.
Adjusting your screenview to zoom 150% will make the charts that much easier to read.
“Some of the larger projects completed in 2013 include: 1190 Mission Street (355 market-rate units and 63 affordable units), Rincon Green (277 market rate units and 49 affordable units), Nema (279 market rate units and 38 affordable units).”
“Very large projects (200 units or more) filed in 2013 and are under Planning Department review include: Mission Rock (1,500 units); 150 Van Ness Avenue (429 units); 41 Tehama Street (398 units); 1066 Market (330 units); 950 Market Street (316 units); and 1301 16th Street (276 units).”
Besides the above projects, rarely a week goes by in which new commercial property sales aren’t being announced – such as the Honda dealership lot and the KRON Building, both on Van Ness – with plans for large-scale residential development projects.
“There are currently 857 projects in the pipeline. Of these, 74 percent are exclusively residential and 17 percent are mixed-use projects with both residential and commercial components. Only 8 percent of projects are non-residential developments. A net total of 50,400 new housing units would be added to the city’s housing stock according to current data. Around 18 percent of all projects, representing 6,000 net added housing units and 2,750,000 sq. ft. of commercial space, are under construction. Around 20 percent of projects (with another 4,200 net units and 3,8 million sq. ft. of commercial space) have received building permit approvals. As of the time of writing, some may have moved to the construction phase.”
Typically, the smaller the unit, the higher the dollar per square foot value on sale or rental, however in San Francisco, 3+ bedroom condos are often high-floor units with spectacular views that sell for extraordinary sums – but these would be outliers to the general rule. The city plan appears to have a bias for 2-bedroom units, which it designates as “family units” – this may be an anachronism considering that 38% of city residents live alone and that SF has the lowest percentage of children of any major U.S. city. Of course, many singles and couples like to have a guest bedroom or home office.
However, in 2012, the city agreed to allow the construction of 375 “micro-units,” apartments of 220 to 300 square feet, including kitchen and bath. A few dozen have been built – one article mentioned a rental rate of $1850/month – and another 160 are under construction in the mid-Market area. It will be interesting to see how this trend develops (or doesn’t) in both the rental and for-sale markets. It might be a good match for the relatively young (but well paid), non-driving, high-tech workers pouring into the city.
The ability to take under-utilized commercial property sites and turn them into multi-unit or even high-rise residential projects is particularly prized: “There are 50 projects in the current pipeline database proposing demolition or conversion of existing [commercial] buildings to residential use.” “Nearly all units replacing office uses are in mid- to high-rise residential structures of 20 to 500 housing units in high density zoning districts. These projects are mostly concentrated in the eastern half of the city: Rincon Hill, East SoMa, Showplace Square & Potrero Hill, Transbay, Mission and Downtown.”
“Single-family building construction made up a very small proportion of new construction in 2013 (1%).” Very few new houses are built in San Francisco, as developers prefer to build higher density housing projects on our limited supply of land. The houses that are built are typically big and expensive.
“Seventy-six percent of the condominium conversions in 2013 (279) were in buildings with two or three units.” The rules governing condo conversion in San Francisco are byzantine, politically-wrought and ever-changing, and the changes affect the ability to convert existing multi-unit properties and TICs into condominiums. Two-unit properties are much the easiest to convert into condos and accordingly enjoy a sale price premium.
The units in these newer buildings command a premium both when rented or, as seen in the chart above, when sold – now surpassing an average dollar per square foot value of $1000. This is the major motivator for developers today.
“About 93% of the new affordable units are rentals affordable to very-low and low-income households.”
“Major affordable housing projects completed in 2013 include: 25 Essex Street (120 units); 701 Golden Gate Avenue (100 units); 474 Natoma Street (60 units); 1075 Le Conte Avenue (73 units); 60 West Point Road (54 units); and 61 West Point Road (13 units).”
There is currently proposed legislation to encourage the legalization of illegal housing units in San Francisco, estimated to exist in the tens of thousands. This is problematical because the reason most of these units are illegal to begin with is that they don’t conform to housing codes – ceiling height, light and ventilation, and fire safety issues are most common – and cannot easily, without substantial expense, be altered to comply.
From 2010 to 2013, the city added approximately 32,000 residents and increased the number of employed residents by roughly 56,000, many of them in new, well-paying high-tech jobs. In that same period, about 4,200 new housing units were added, not remotely adequate to meeting demand. And it is currently projected that the city’s population will continue to grow in coming years. When demand soars and supply is inadequate, prices and rents go up (in the city’s recent case, feverishly), and builders start building again as quickly as they can, hoping to catch the wave at exactly the right time.
review and approvals process: