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Employment, construction, and the cost of San Francisco apartments

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Re: Employment, construction, and the cost of San Francisco apartments

#41

Post by makomk »

rayiner wrote: post #34
timr wrote: post #27

Earlier quoted context omitted.

"Building straight into the sky is easy." Except, it isn't. Construction costs of taller buildings scale non-linearly with every additional story [1]. Building skyscrapers costs upwards of $300 per square foot, whereas single-family homes cost a fifth or a sixth of that. It's so much cheaper to build low-rises, in fact, that virtually no developers will take on a high-rise project unless the property is so expensive…

> Instead, they build class I-III in the Mission and SOMA. These buildings will always be "luxury" units, because at $300+/sq.ft. construction costs the economics don't pencil out otherwise. In the long run, that isn't true. A skyscraper has a useful life well in excess of 50 years. If you look at places like Chicago, you'll see that luxury high-rises get renovated 20-30 years in to become mid-range places. Of course…

It requires something more than foresight - it also requires that the demand for mid-range apartments now matches up with the demand for luxury high-rise apartments several decades ago, and there's simply no reason why this should be so. (Oh, and as timr points out, it also requires that the buildings can't more profitably be refurbished into luxury apartments. Basically, it needs to be grotty enough that the wealthy don't want to live there, but not so derelict that it gets demolished.)

Re: Employment, construction, and the cost of San Francisco apartments

#42

Post by timr »

twinkletwinkle wrote: post #37
x0x0 wrote: post #33

Earlier quoted context omitted.

Why is $300/ ft2 construction costs a problem when condos are going for $1k / ft2? Even selling condos for $600 / ft2 would be a major improvement. data: http://www.trulia.com/real_estate/San_Francisco-California/m... then click the wavy graph next to "explore this area" sales price / sqft

A quick distinction, you have to build all of a skyscraper but you only get to sell part of it as condos. There are hallways, janitors' closets, fire stairways, etc etc.

Yes, this exactly. If you can get 70% efficiency in a skyscraper you're doing phenomenally well. Also, the cost of land isn't included in the $300/sq.ft. number (though that becomes a proportionately smaller concern for taller buildings, for obvious reasons), nor the costs of financing, insurance, maintenance, etc.

But more to the point, these numbers set only the lower bound on what a unit will sell for. These numbers don't predict the final market price of new construction, but they tell you when a project can be justified.

Re: Employment, construction, and the cost of San Francisco apartments

#43

Post by harryh »

timr wrote: post #38
rayiner wrote: post #34

Earlier quoted context omitted.

> Instead, they build class I-III in the Mission and SOMA. These buildings will always be "luxury" units, because at $300+/sq.ft. construction costs the economics don't pencil out otherwise. In the long run, that isn't true. A skyscraper has a useful life well in excess of 50 years. If you look at places like Chicago, you'll see that luxury high-rises get renovated 20-30 years in to become mid-range places. Of course…

"In the long run, that isn't true. A skyscraper has a useful life well in excess of 50 years. If you look at places like Chicago, you'll see that luxury high-rises get renovated 20-30 years in to become mid-range places." It really depends. They just gutted 101 Van Ness (a pre-existing 1960s-era skyscraper) and turned it into housing. It's all luxury -- the cheapest units are upwards of $3000 a month for a tiny studi…

> That's fine, but it doesn't change the fact that new construction doesn't help anyone but wealthy people in SF, today.

If you build more luxury housing it lowers the price of luxury housing so that a marginally less rich person can move to that tier.

That marginal move reduces the demand on the next lower tier of housing which should reduce the price at that level.

And so on, and so on...

Re: Employment, construction, and the cost of San Francisco apartments

#44

Post by nerfhammer »

sampo wrote: post #35
thescriptkiddie wrote: post #13

Earlier quoted context omitted.

Here's an interesting comparison. New York City's population density is 56% higher than San Francisco's, and the average height of a building in New York City is only 6.8 stories (in spite of skyscrapers pushing up the mean). https://en.wikipedia.org/wiki/List_of_United_States_cities_b... http://www.sunilmishra.in/2012/07/05/average-building-height...

> New York City's population density is 56% higher than San Francisco's And even New York City is not really that dense: San Francisco: 18 000 people per mi2 New York City: 27 000 Barcelona: 41 000 Paris: 55 000 Only Manhattan (72 000 per mi2) is dense.

New York City is vast. Brooklyn alone is 40% larger than San Francisco.

Re: Employment, construction, and the cost of San Francisco apartments

#45

Post by imgabe »

timr wrote: post #27
matt_wulfeck wrote: post #9

Building straight into the sky is easy. You'd be amazed at how earthquake-proof skyscrapers are with modern technology. You want a challenge? Build in a city where you're required to post notice any time you cut down a tree on your own property.

"Building straight into the sky is easy." Except, it isn't. Construction costs of taller buildings scale non-linearly with every additional story [1]. Building skyscrapers costs upwards of $300 per square foot, whereas single-family homes cost a fifth or a sixth of that. It's so much cheaper to build low-rises, in fact, that virtually no developers will take on a high-rise project unless the property is so expensive…

The big price jump is where you have to switch over from wood construction to steel. Once you're high enough that you need a steel structure you may as well build it as tall as you can to get as much use out of the land as possible.

Re: Employment, construction, and the cost of San Francisco apartments

#46

Post by refurb »

Gibbon1 wrote: post #3

Answering a question, why the decline in rents 1950-1960? Far as I know during WWII the population of the city swelled due to war time industry. After the war people moved to newly created suburbs in Santa Clara and the Peninsula. I'm unsure but I think my grandparents moved to SF during the 1939-1940 WWII preseason. And by the late forties had moved away.

People were leaving!

In 1950 the population of SF peaked (at the time) at 775,000, by 1960 it was down to 740,000, then by 1980 down to 678,000 (13% drop over 30 years!).

Hard to believe it living in SF today.

Re: Employment, construction, and the cost of San Francisco apartments

#47

Post by davidw »

martinald wrote: post #39
matt_wulfeck wrote: post #9

Building straight into the sky is easy. You'd be amazed at how earthquake-proof skyscrapers are with modern technology. You want a challenge? Build in a city where you're required to post notice any time you cut down a tree on your own property.

It might be 'easy' and 'earthquake-proof', but it sure isn't cheap.

No, it's not. But SF's prices could easily make the investment worthwhile.

Re: Employment, construction, and the cost of San Francisco apartments

#48

Post by timr »

harryh wrote: post #43
timr wrote: post #38

Earlier quoted context omitted.

"In the long run, that isn't true. A skyscraper has a useful life well in excess of 50 years. If you look at places like Chicago, you'll see that luxury high-rises get renovated 20-30 years in to become mid-range places." It really depends. They just gutted 101 Van Ness (a pre-existing 1960s-era skyscraper) and turned it into housing. It's all luxury -- the cheapest units are upwards of $3000 a month for a tiny studi…

> That's fine, but it doesn't change the fact that new construction doesn't help anyone but wealthy people in SF, today. If you build more luxury housing it lowers the price of luxury housing so that a marginally less rich person can move to that tier. That marginal move reduces the demand on the next lower tier of housing which should reduce the price at that level. And so on, and so on...

This was addressed by the source article. It happens a bit, but it isn't magic: one of the author's models found that for every 1% increase in housing, rents dropped by 1.7%.

Lowering rents enough to make SF affordable for poor people requires construction on a scale that isn't just impractical -- it's economically impossible. No developer would choose to build into such a market with fixed construction costs at hundreds of dollars per square foot.

Re: Employment, construction, and the cost of San Francisco apartments

#49

Post by api »

mahyarm wrote: post #32
forgotmysn wrote: post #23

Earlier quoted context omitted.

the SF Planning Commission holds their public meetings on Thursdays at Noon. They don't want people to come

More the unemployed and retired.

The retired. Most boomers have most of their savings in real estate.

Re: Employment, construction, and the cost of San Francisco apartments

#50

Post by oh_sigh »

snewk wrote: post #20
matt_wulfeck wrote: post #9

Building straight into the sky is easy. You'd be amazed at how earthquake-proof skyscrapers are with modern technology. You want a challenge? Build in a city where you're required to post notice any time you cut down a tree on your own property.

i acknowledge that city ordinances can be a huge headache, but consider that trees serve more than just aesthetic purpose. They provide shade, filter particulate matter, and increase air quality for a much larger area than just 'your own property'. This is especially important in the urban core of cities where greenery can be scarce, and mature trees even more so.

Consider that you can just girdle the tree to kill it, and then the city will then force you to take it down.
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