Timing for Hundreds of Approved Units Pushed Back, AgainMarch 2, 2023
Speaking of previously approved projects that have yet to break ground, the entitlements for the 230-unit development to rise at 667 Folsom Street are slated to expire in two months time and building permits for the project have yet to be requested.
With that in mind, Equity Residential is now seeking a three-year extension to the performance period for the project which had been granted by Planning back in January of 2017.
And while the ground for the 14-story building to rise on the Canton Seafood & Dim Sum restaurant site on the corner, which the 667 Folsom street development is slated to wrap around, has yet to broken, building permits for the 89-unit development were recently issued and demolition permits have been secured as well.
With the subsequently approved three-year extension for the development of 667 Folsom Street slated to expire this May, Equity Residential is now seeking another three-year extension. And don’t blame NIMBYs or Planning, the development simply isn’t “financially feasible” based on current rents versus the cost of construction and ongoing “geopolitical uncertainty.”
At the same time, while the building permits for the 89-unit development to rise on the corner were issued and demolition permits were secured, the ground for that project has yet to be broken and they’re on their last permit extension, with the demolition permit slated to be cancelled if the Canton Seafood building isn’t demolished by the end of this year.
We’ll keep you posted and plugged-in.
Comments from Plugged-In Readers
“geopolitical uncertainty” … What a funny way for someone to admit the downtown condo market is held up by capital flight from certain angry countries
As outlined above, the development was envisioned/approved as rental units, not condos.
“Financially feasible” is, of course, the key. Many/most of the market rate residential projects in the pipeline are not viable now and for a number of years going forward. This is especially true of SOMA/Central SOMA projects such as those mentioned in the post.
Per the SF Business times: ” in March 2020, there were approximately 245,505 office jobs in downtown San Francisco, but the city’s Budget and Legislative Analyst’s Office recently said that S.F. has lost nearly 150,000 daily office workers since then because of remote work and online shopping”. He failed to mention the relocation of companies out of SF which is the 3rd factor.
It’s these downtown jobs that propelled much of this development. And potential jobs – the Central SOMA Plan envisioned 45K new jobs in an area just blocks from here. Then there were massive office projects such as The Tennis Club complex. After losing Pinterest as a tenant and failing in a bid to convert office space to lab space the project has been abandoned. There are several large residential projects nearby that likely won’t get built as well. Such as the 35-story tower proposed kitty korner from this site and a 2-tower residential project a block away on Bryant.
> He failed to mention the relocation of companies out of SF which is the 3rd factor.
If only SF had an engine to create new companies. Maybe I’ll ask ChatGPT where it lives to see if that helps me understand…
Well, just in case other readers don’t grok the sarcasm here…S.F. does have an engine to create new companies, it’s located in Palo Alto and Menlo Park. And OpenAI appears to have a lot of their staff in San Francisco proper.
It remains to be seen if incubating new companies will mean a whole lot for real estate prospects if the exodus of existing companies results in a net drain of people coming into S.F. offices. And of course, ChatGPT will probably result in the loss of many, many more tech jobs than OpenAI will create if it comes anywhere near fulfilling it’s promise.
> S.F. does have an engine to create new companies, it’s located in Palo Alto and Menlo Park.
And South Park.
> S.F. does have an engine to create new companies, it’s located in Palo Alto and Menlo Park.
Chevron, Folgers, Hills Bros. Coffee, Shaklee, Bank of America, Esprit, Del Monte, Transamerica, Bechtel, the lost goes on (not even counting the dot com busts)
Companies have moves out of SF (usually in chunks) for ages and they always got replaced. Maybe this time will really be different though.
> And of course, ChatGPT will probably result in the loss of many, many more tech jobs than OpenAI will create if it comes anywhere near fulfilling it’s promise.
I’d argue that all those back office jobs that moved to Dallas are a lot more at risk than SF jobs.
Each of your posts is a variation of the same theme. It’s tiresome.
He does tend to go on about “office projects such as The Tennis Club complex”…and “losing Pinterest as a tenant” a lot, sometimes I think he was one of the LP’s that was involved with it.
The 1st week of February, Pinterest completed their second round of layoffs, so even if they had committed to being a tenant, in hindsight it seems obvious to me that the The Tennis Club complex would have laid vacant even if it had gone ahead.
The City has too much office space and will have a surplus of it for the foreseeable future.
The developer fees need to be dramatically reduced. The affordable housing requirements do, too, perhaps down to 10%.
There are glimmers of hope. Notorious NIMBY Supervisor Peskin was recently quoted as saying the housing situation is mostly a math problem and not political, which is a huge symbolic moment.
Because of situations like this, I have long wondered how the state can hold local jurisdictions accountable for not producing housing elements that meet production targets because of forces beyond their control. Full disclosure: I work in the San Francisco Planning Department, but in IT.
Speaking of failed projects what is the status of that private club (lmfao) in the Transamerica pyramid by some new yorker who clearly failed to read the room? Talk about a horrible idea.
not failed, I don’t think they were planning on sometime in 2023. The building is getting an upgrade as well. Also, lots of private clubs in SF do very well, so why do you think they didn’t read the room?
Because San Francisco is empty and most certainly NOT a private club type of city. There is no market for private clubs in a city that at it’s best was empty by 8pm. And please don’t cite The Battery, that is an embarrassment.
You can hate on SF all you like, but come on, it’s just not credible to say that the city is “empty by 8pm”, when there are tons of bars and restaurants in the city that are fully booked at that time. I am familiar with The Battery but I don’t know how it’s doing as a bussiness. Are you suggesting it’s failing, or that you just don’t like it? I don’t like private clubs either but there’s a difference between saying that and that somehow they are objectively bad.
The Bohemian Club
and then there are things like
Young Scandinavian Club
SF Yacht Club
Can’t even support a lame Soho House. Those old school clubs are certainly not comparable but not a bad red herring.
And good luck going to a restaurant in SF after 8pm, you’ll be closing the place down by 9.
“you’ll be closing the place down by 9.”
You have absolutely no idea what you’re talking about.
I’m a member of The Battery and I rather like it. Often quite busy, and is certainly not empty by 8 pm.
Yes you’re right, San Francisco is really crushing it and is hopping. The worst recovery rate among any major city in terms of return to office, massive layoffs in the only sector that has offices in sf and the largest employer can’t dump office space fast enough. But yeah the social scene is amazing, makes sense.
San Francisco’s office employees are disproportionately employed by the sector which is developing, marketing and selling the technologies that facilitate decentralized work, so it shouldn’t be surprising that The City’s workforce lags other major cities in terms of return to office.
That sector also happens to be highly sensitive to equity investors’ willingness to pay for corporate earnings in advance, so when investment either dries up or is diverted to other areas (such as say, the bond market when interest rates are normalizing), employment by companies in that sector tends to shrink faster than in other sectors. Given this, it isn’t surprising that many of San Francisco’s corporate employers are initiating “massive layoffs” at this time.
Lastly, The City’s largest employer is a largely capitalized public company operating in the same sector and which has a customer base anchored by firms also operating in that sector. That company is currently under pressure from a host of corporate raiding firms including Starboard Value, Inclusive Capital, ValueAct Capital, and Third Point to cut costs in order to pump up its stock price in the short term. So it is not surprising that company is jettisoning office space faster than a company outside that sector and/or not suffering under similar outside pressures.
All three of your points about the non-social scene are only saying one thing.
You can say that “there is no market for private clubs” in San Francisco, but the market is saying something different. I am not a fan, but you have to admit Michael Birch, the founder of The Battery, is not embarrassed.
During the summer of 2021, the San Francisco Business Times reported that he paid between $10 million and $12 million for a six-story clubhouse on Lake Merritt to facilitate an expansion of The Battery to Oakland before even setting foot inside of the building.
I guess Rick Conway’s decision to have erstwhile Mayor Ed Lee donate San Francisco to Big Tech wasn’t such a good idea after all.
Ron Conway too, miss the good old days of Willie Brown giving Kneepads a no show job and BMW for a few BJs
San Francisco is learning, after the fact, that it is risky to go all-in with a partner whose motto is “move fast and break things”.
or they are learning that the 25% on site affordable or 33% in-lieu fee is too much
Except that it isn’t. As I pointed out last month, San Francisco exceeded its overall housing goals from 2015 to 2022 because the city produced far more market rate units than was required by the State Department of Housing and Community Development and ABAG, which sets the goals. The inclusionary housing mandates are really the only even partially effective policy force The City has to restrain gentrification.
Equity Residential isn’t some small-time mom-and-pop local developer, they could have proceeded at any point during the last six years. If they were sitting on their hands, implementing some Ayn Randian “strike” against (future) tenants and hoping for Supervisors to reduce the on-site affordable or the percentage of the in-lieu fee, looks like they miscalculated and missed their window of opportunity.
But units finished between 15-22 would primarily have submitted before the Prop C increase. This thread topic project didn’t make it and it sits, 988 Harrison on the other hand applied before it and is building.
housing goals from 2015 to 2022 because the city produced far more market rate units than was required by the State Department of Housing and Community Development and ABAG, which sets the goals.
You don’t have to be John Galt to find this sentence…perverse. Dare I suggest the main reason this inanity (of some central authority setting “housing goals”) has been tolerated all these years is because it’s never had more than the slightest affect on anything. Try and actually enforce it, and you’ll see a referendum that makes Prop 27 look like a nailbiter.
sparky-b, If you think Equity Residential is trying to deliberately sandbag as a way of indicating the increases mandated by Proposition C specifically are unacceptable, then okay. That’s a fair point.
Hopefully this will come up before the Planning Commission and a Commissioner will ask them about it.
Notcom: some of the commenters on this site were salivating at the prospect of The State gutting all of S.F.’s local development standards in pursuit of getting more units, including what would probably turn out to be unnecessary luxury units, built. However the legal mechanism they we discussing doesn’t have anything to do with enforcing ABAG’s goals.
I haven’t been following the news about the so-called builder’s remedy, which allows developers to basically build whatever they want in cities that don’t have state-compliant housing plans provided they set aside some units for low or middle income households closely, but my understanding is that San Francisco, which planned for 82,000 additional units, had that plan approved and finalized last month.
I was looking forward to developers trying to exploit it for the same reason you point out. Sometimes you have to heighten the contradictions.
The current situation is a curious – if unintended – partnership b/w Libertarians – who (presumably) want no restirctions whatsoever on what you can build, and Left-Wing Statists who want to dictate everything you can/can’t do. It probably seem to the former like an advantage to support the latter, but be careful who you turn your back on. And in the middle, of course, are homeowners, who (again, presumably) would like to do whatever with their own property, but recognize the same would apply to their neighbor(s), so settle for the compromise of local control (zoning)..
Meanwhile Salesforce has just dumped another 125,000 SqFt office space on the market for sublease. Who wants to live downtown now??
That brings the total to 1 million feet of space given up by Salesforce in downtown SF. They also pulled out of leasing all the office space in the Parcel F tower which leaves that project on shaky ground.
What it actually means U$D has a gun pointed at it. Global marginal capital flows in U$D are getting the squeeze squozed out of them. Trade is moving away from U$D to whichever local currency or commodity is best suited. Those days of 3rd world eating the U$D may be close to over if not over.
A convergence of multiple factors:
1) Offshoring – globally and to other economical destinations within US
2) Remote commuting – not all jobs – but where possible
3) Erosion of trust/De-Dollarization gaining momentum
4) Falling numbers of productive labor (in US and Europe) and an inability to compete globally
5) Increasing costs of energy and raw materials
6) Increasing silent taxation (debt financing) and rising inflation even in an environment of higher rates
7) Capital flight to places with high yield probability
8) Increasing crime and falling quality of life standards-US in general and SF very specifically.
For Mr Buyer – low interest rates in the near term may not be possible. For Mr Seller – cut your losses if you can.
LOL, so do you live in St. Petersburg, or Beijing?
He reads like he has the television on all day and has been heavily influenced by the punditry of Nouriel Roubini.
Perhaps what he’s talking about will come to pass in the fullness of time, but in the meanwhile, he should take an in-person trip to a country such as Ecuador, El Salvador (the pathetic bitcoin thing notwithstanding) or even Peru or Venezuela that’s had their economy thoroughly dollarized and then report back to us about “De-Dollarization gaining momentum”.
Gonna be hard for a literal and figurative cave dweller to go anywhere and get away from the constant stream of Fox News and Newsmax they have on.
Try to diversify your risk instead of underhanded jabs at strangers. No amount of cope will stop the rate hikes.
In the link below, you will find data that shows UST holdings globally. Of note are China and Japan which both decreased their overall holdings by ~$400B in the last 1 year between Dec ’21 and ’22. Globally, the overall holdings for the same period are down by ~$426B
Why do you think both China (2nd largest) and Japan (3rd largest) economies are reducing their UST holdings?
I don’t (yet) have access to the latest international trade settlement by currency data. But its already apparent Russia-China trade has replaced USD/Euro-Ruble trade with Yuan-Ruble – and the trade volume is substantial. Both Saudi Arabia/Iran have very recently signed a deal with China to trade energy for Yuan.
A few other trade flows where USD has been replaced with local currencies/commodity. If you have data to the contrary where the share of USD for international trade settlement for the 2021-2022 period has increased, please do share.
Crazy how people like you have been saying this same provably BS trash for decades and yet none of the evidence supports your explicit or implicit claims. Then again, conspiracy-addled and adjacent people keep pushing nonsense like this and don’t care what reality has actually shown over and over and over again — they just like to keep parroting the same garbage.
@Anonymous – don’t worry about me. Try and explain why China and Japan are reducing their UST holdings. Until before this War in Ukraine, Euro was eating into USD share as a choice currency for international trade settlements. Even the Federal Reserve concurs on long risk to USD in international trade The International Role of the U.S. Dollar . This note is from 2021 and things have only gotten worse.
Instead of worrying about me – maybe share some data to the contrary.
Oil Deals dent US Dollar dominance
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