Acquired for $4.125 million in June of 2016, plans to level the shuttered nightclub space at 280 7th Street – a through block building which was once home to “Rawhide II,” the only Country Western club in San Francisco – and build 20 condos upon the Western SoMa site were soon drawn, revised and approved by Planning back in 2018.
Demolition and building permits for the six-story development were subsequently requested and approved in August of 2019, but the ground for the development has yet to be broken. And the fully-entitled development/site, which was designed to yield a mix of 12 one-bedrooms, 6 twos, 2 threes and a ground floor retail space, is now back on market with a $3.25 million price tag.
Having failed to trade last year, despite being fully approved, permitted and listed at a loss, the 280-282 7th Street property and plans were making the rounds a few months ago with an even lower asking price of $2.998 million, touting “potential seller carryback” financing “to further enhance [its] appeal.” Yesterday, the list price for the fully approved and permitted project was further reduced to $2.798 million.
At the same time, there are over 20,000 units of housing in projects across the city that have been approved by the City but have yet to break ground and over 70,000 units in the overall pipeline, with returns and demand on the decline.
Shoulda left the Rawhide alone.
When this site goes back to the lender for whatever reason, that will be the definitive signal for the flippers, developers, and other hangers-on in the S.F. real estate “game” — as well as the YIMBY ‘useful idiots’ that cheer lead for them — that they must stop parroting that “San Francisco has to build 82,000 new units of housing by 2031” line they love so much. The City has an approved housing element that has been certified by the State for hitting their housing mandate, and the State Legislature has been falling all over themselves making it easier to build more apartment buildings and affordable housing units, not to mention the elimination of single family zoning throughout the city.
If fully approved and permitted projects like this one aren’t even breaking ground due to higher interest rates than when originally proposed, or lender projections that San Francisco is going to be suffering from dwindling population, declining rents and home values, and lenders unwilling support investments here, then our local chorus of housing capitalists blaming the length of time it takes to get a fully-permitted project or neighborhood activists for the “housing crisis” need to STFU.
You know housing density went down dramatically after 2020 right? Plenty of those who remained escaped cramped living situations with roommates and got units of their own / bigger units. i.e. the city doesn’t really get the relief that is implied by the ‘exodus’. Also, plenty of people would love to move back (and should, from an environmental perspective) from the exurbs if they could afford it. Lots of folks with home insurance lapsing right now that may not be able to keep living in the wildland–urban interface, leading to more demand in urban areas. Very derisive for someone who hasn’t thought about the issue deeply.
Yes. I have thought about the issue deeply. It was derisive because the folks claiming that the chief cause of expensive housing is the regulatory burden S.F. places on developers which in turn discourage building need to be derided.
You seem to be saying that there is, or will be, plenty of demand for housing going forward, even given the current exodus, and that the current exodus shouldn’t be happening, because lower-cost housing located elsewhere doesn’t reflect the risk of wildfires.
If you are correct, then why hasn’t an enterprising developer snapped up this property and completed the project on it? The pricing from a few months ago constitutes a massive discount, given that the asking price was a 27 percent decrease from what the current seller paid for it seven years ago, and that’s just in nominal terms. Why didn’t an enterprising real estate capitalist snap up that whole, completed 25-unit building over on 603 Tennessee Street and turn around and sell the units? Same goes for the Saitowitz project at 224-228 Clara Street, which the developer group is trying to sell instead of complete development on.
Sure, those are just recent anecdotes, but if there was a large unmet demand, then these developments wouldn’t be sitting unsold on the market for months, or years, on end. The marketplace doesn’t seem to agree with you that the demand is going to materialize.
I don’t even know what the value of “fully entitled” is supposed to be in a city like SF where anyone can appeal your supposed entitlement at any time. Now that the state has stepped in, maybe it’s worth something, but heretofore the “entitlement” has been essentially worthless.
Your comment would have been relevant in The Before Times.
A “fully entitled” proposal should be a commitment by the developer to proceed to break ground. Instead, in cities like S.F., members of the local real estate capitalist community have decided that it constitutes some kind of ersatz call option where the underlying instrument is the project actually breaking ground, and that option can be traded at any time, including years after it was obtained, if market conditions don’t mark the option as “in the money”.
Once it becomes apparent in the next few years that developers don’t intend to actually build regardless of how much regulatory interference comes from Sacramento, and that development is driven mostly by prevailing interest rates and the sales prices reflected in current market conditions, I expect a citizen-driven ballot initiative to roll back some of the excesses of recent legislative sessions that gave developers too much power, given that they don’t intend to every actually build when sales prices aren’t increasing.
“roll back some of the excesses of recent legislative sessions tthat gave developers too much power, given that they don’t intend to every actually build when sales prices aren’t increasing”.
(I am not suggesting you figure otherwise) Would that build any more housing? Unlikely, the money’s going to go/stay elsewhere.
No, not suggesting that a ballot initiative reigning in the recent excesses of the state legislature would by themselves build any more housing in the short term. But the current emphasis on regulatory rollbacks and political repression on local residents by Sacramento politicians distracts attention from the fact that none of these changes force developers to actually build, and they waste scarce taxpayer dollars by leading ill-informed members of the public to believe that they will.
As one example, this guy Gustavo Velasquez, who is in charge of the State Department of Housing and Community Development’s (HCD) Housing Accountability Unit (HAU), doesn’t have any tools to force developers to be accountable for building, as opposed to flipping entitled projects like the one highlighted in the above post. Paying him to be a publicly-financed mouthpiece for the homebuilder industry also doesn’t build any more housing. By eliminating his position and his bureaucracy, we can at least stop wasting taxpayer money.
Well, that would go away if the process wasn’t so damned cumbersome – that there is a business of flipping entitled projects shows you how bad the city and its actors make it. It doesn’t seem practical to force someone to develop if the numbers don’t add up at a later time. What do you propose to remedy this?
I couldn’t disagree more. If the process of obtaining a building permit was made close to frictionless, there would be more flipping of entitled properties, not less, because the people who are “fed up” now with the backlog or wait times at Planning/DBI (which represent pent-up demand for flipping opportunities, regardless of whether or not the flips result in actual profits) would re-enter the “marketplace” for entitled properties.
The problem, which real estate capitalists will never admit to, is that San Francisco has an oversupply of people with a greedhead, gold rush mentality who want to make their fortune in real estate. This surplus was brought on by the fact that since before the dot com bomb, any ambitious flipper, developer, or other hanger-on in real estate could read on the web that S.F. had a cohort of highly-compensated workers at tech firms who were willing to overpay for housing, and that cohort was being refreshed regularly from outside California and indeed outside the U.S. with people who weren’t aware of how high-priced housing in S.F. was, and were easy pickings.
I think the only thing that will reduce this oversupply of folks in and willing to enter the S.F. real estate “game” is to get the word out to them and potential new entrants that such tech workers have been since 2022 and are being laid off in droves, the current A.I craze notwithstanding, housing prices are coming down to a lower level of equilibrium and S.F. real estate market participants are likely to lose money if they invest in property here in the short term.
10/21/2022: extension approval says “this is the final extension”. So are they actually selling an “approved” project at this point? And as always with the disclaimer that “fully-approved” means site permit only, still several years from ground breaking for the new buyer
sparky-b, the second quoted ‘graph in the post above says “Demolition and building permits for the six-story development were…approved in August of 2019”. I take that to mean that ground could have been broken prior to the pandemic, had the project proponent had the financial means or will to do so. The fact that they haven’t broken ground and are trying to sell the entitled project leads me to believe they’ve done a calculation and think the completed units won’t produce the desired profit or they don’t have the financial means to complete the units.
If you want to knock a project that’s been on the market for a while and is “still several years from ground breaking for the new buyer”, consider if you will, 820 Post Street. Three years ago, this site’s editor wrote:
The current listing for the Fully entitled in-fill development project specifies 12 residential units and 1 retail storefront. For a current asking price 22.9 percent less than was asked during the Fall of 2020, a price that was set in mid-Winter of this year.
It goes on to say that “the project requires construction documents”, which I read to mean that a building permit application needs to be re-worked, re-applied for and still at least a few years from being issued to any new buyer.