What's the Holdup in the Bay Area?

Developers and other local industry professionals tell the San Francisco Chronicle that many approved housing projects are stalling due to rising construction costs, including fees.

Bill Witte, president of developer Related California, explains, “Most entitled projects in the city are for sale right now — either publicly or privately ... We’re at that point in the cycle.” The Chronicle reports that there are 6,750 units currently under construction in San Francisco, above the historic average and 1,000 more than this time last year, but there are an additional 15,000 approved, permitted units that have not yet started construction.

Developer Eric Tao of AGI, which has completed about 1,200 units in SoMa, the Mission and Dogpatch over the past decade, said construction cost increases of 10 to 15 percent annually over the past five years is mostly to blame for the delays. He said his company is re-evaluating aspects of 1270 Mission St.’s design, hoping to reduce costs enough to make it pencil out. “We are trying to make it work — it’s close but not quite there,” Tao said. “When we got 1270 Mission approved, if everything else had been frozen in time, we would be building right now. But construction costs went up. Time is not your friend when you are a developer.”

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