Bay Area apartment construction lags as rest of country booms – Times-Standard
From Miami to Seattle, apartment construction is booming as cities across the country recover from the pandemic. But in the Bay Area, it’s a different story.
While U.S. apartment construction is at a 50-year high, San Francisco is expected to see a 58% drop in apartment completions this year, according to data from the rental ad site RentCafe.
In San Jose, meanwhile, only half the number of apartments is expected to come online compared to 2021. And in Oakland, apartment construction is expected to drop 80%.
The declines are partly due to national challenges such as labor shortages, rising material prices and supply chain issues that other regions have been able to overcome so far This year.
But what makes the situation worse in the Bay Area, experts and housing advocates say, are long-standing barriers to development, including limited available land zoned for multi-family homes, cumbersome environmental reviews and vetting processes. endless permits and approvals – which neighbors often exploit to lobby. officials to delay or block new apartment buildings.
All of this contributes to inflating the area’s already astronomical construction costs, which discourages construction despite the high rents developers can charge for new apartments in the Bay Area.
“When you add up all of those factors, it really blocked the pipeline,” said Michael Lane, director of state policy at the Bay Area think tank SPUR. “The economy just doesn’t work.”
Last year, the Bay Area saw apartment construction rebounds COVID-19 closures in 2020, driven by an increase in new developments in Oakland and downtown San Jose. But as construction has slowed this year – although some large-scale projects continue to see the light of day – the area lags far behind many population centers in the country when it comes to building apartments.
The entire San Francisco-Oakland-Hayward metro area is on track to complete approximately 7,400 apartments this year, down 26% from 2021, and less than half the number of units planned for similarly sized metros such as Seattle and Phoenix, which are each planned. to deliver more than 15,000 units, according to RentCafe. The San Jose-Sunnyvale-Santa Clara metro area’s 3,000-unit pipeline is down 50% from last year and only one-third the size of Nashville’s smaller metro.
To kickstart construction and ease a growing statewide housing shortage, California lawmakers pushed earlier this month two bills facilitating the redevelopment of underutilized malls, office buildings and parking lots into new apartments and townhouses. Supporters say the bills, expected to be signed into law by Governor Gavin Newsom, could help lower housing costs by potentially creating hundreds of thousands of new affordable, market-priced homes across the Bay Area. .
Doug Ressler, director of business intelligence at sister company RentCare Yardi Matrix, said the reforms should unlock new land for housing by streamlining the complicated rezoning process to allow dense residential development on commercial properties.
“City cores like San Francisco, just like New York, have a finite amount of land, and no one is producing more land,” Ressler said.
At the same time, state officials are target San Francisco housing policieslaunching an unprecedented survey last month into why it’s taking longer there than anywhere else in California to approve much-needed new homes.
Unlike New York, Miami and other major cities, where development is booming as people return in droves after fleeing at the height of the pandemic, San Francisco and the rest of the Bay Area’s economic hubs – who have embraced remote working more than perhaps anywhere else in the country – were slower to recover.
As a result, Bay Area leases, while taking advantage of their recent low point in 2020have yet to reach pre-pandemic levels in some cities, including San Francisco and Oakland.
Lane with SPUR said uncertainty about the number of tenants wanting to live in the region’s busy urban centers – especially given fears of an impending economic downturn – could also prevent developers from pursuing new projects. apartments in these areas.
“Are we back to normal before the pandemic or have we changed forever?” Lane said. “It’s probably a mix of both, but it will take a long time to become clear.”