SAN FRANCISCO | 30 Van Ness Avenue (Hayes Point) | 540 FT | 47 FLOORS

[unpermitted_variance]

Yeah, very bad time to be a skyscraper/development enthusiast in the Bay right now. I am confident that things will rebound, as that's the nature of large economies, but I'm not expecting much to happen for the next few years. Development happens on long timelines, that's the nature of the game.

[gillynova]

Originally Posted by unpermitted_variance

Yeah, very bad time to be a skyscraper/development enthusiast in the Bay right now. I am confident that things will rebound, as that's the nature of large economies, but I'm not expecting much to happen for the next few years. Development happens on long timelines, that's the nature of the game.

Yeah, I definitely felt this too. I think the only skyscraper/development that's rising is near Levi's Stadium and Treasure Island. I haven't really seen much of Oakland and San Jose only has 1 building that topped out (Garden Gate Tower)

[Jerry of San Fran]

NOT A GOOD SIGN The cover over the MUNI entrance at Van Ness/Market and the sidewalk was removed a couple of days ago. Apparently, the permit for the wood protective covering was removed as the permit has not been renewed. The developer had hoped to get financial backing for the construction this year, but it appears that did not happen. Looks like a second giant hole in the ground with a foundation but no building in San Francisco. Sad. I was excited and looking forward to this one being built.

[theskysthelimit]

The developer Lendlease, is pulling out of the US. This project is up for sale. IMO, another 5+ years for someone to take over the project.

In a strategic shift announced this week, Australia-based developer Lendlease said it will pull out of international construction and development within the next 18 months to focus on its domestic market.

http://www.globest.com/2024/05/30/le...20240809115757

[Zapatan]

Kinda sad they see the US as such a bad investment. I'm guessing issues in the area like crime and homelessness (Van Ness isn't the nicest part of SF) factored in. Did they not know this beforehand?

[fimiak]

It's the interest rates. It affects these buildings in a huge way. It's probably 30-50% more expensive to build this vs 5 years ago, not even counting the increase in labor and materials.

[Zapatan]

Originally Posted by fimiak

It's the interest rates. It affects these buildings in a huge way. It's probably 30-50% more expensive to build this vs 5 years ago, not even counting the increase in labor and materials.

Where are you getting 30-50%? That's insane if true. I was going to say they could just wait until next month when rates (may) go down. Perhaps it isn't enough.

[fimiak]

Originally Posted by Zapatan

Where are you getting 30-50%? That's insane if true. I was going to say they could just wait until next month when rates (may) go down. Perhaps it isn't enough.

Well I am not a professional by any means, but an amortized loan at 3% over 15 years results in about 25% interest paid. An amortized loan at 6.5% over 15 years results in interest paid of 57%. So the total cost is about 25.6% more.

If the loan is 30 years, then total interest costs are 49.9% more paid.

[iamfishhead]

Originally Posted by gillynova

Yeah, I definitely felt this too. I think the only skyscraper/development that's rising is near Levi's Stadium and Treasure Island. I haven't really seen much of Oakland and San Jose only has 1 building that topped out (Garden Gate Tower)

I mean, aside from all the other factors we know (interest rates, low downtown occupancy, lowered residential rents, demand for housing, etc) I do think two other things might be at play: (1) a ton of projects and especially a number of residential high rises and skyscrapers were planned and submitted before the state density bonus laws passed, so that might have some projects going back to the drawing board, to see what they can get with the bonus and (2) in the areas near downtown that have mixed use or downtown zoning types, it is permitted to construct either commercial, residential or a mixture of types. The fact that offices aren't in demand may have also have led companies planning to build to rethink what they're going to build.