Hans Hansson | February 7, 2013
As a commercial real estate broker, housing availability is not normally something that is on my radar; but with a market like the one we are currently in, I am paying attention. With commercial vacancy rates dropping dramatically and office rental rates skyrocketing I am concerned about our own financial cliff.San Francisco is experiencing another tech boom and like the dot-com boom of 1997-2001, this boom is seeing growth in residential construction and a modest increase in commercial office construction. The problem is that by the time the commercial office construction is completed this growth cycle will likely be over and we will once again have an abundance of office space available with lower rental rates that will follow.
Right now there are over 43,000 residential units planned or under construction in San Francisco, including the Hunters Point project and Treasure Island development plans. The majority of these units will be apartments for rent, with some condos and townhouses for sale planned, mostly in the Hunters Point project. There is virtually no single home development occurring at all.
The lack of single home development will have a huge impact on the future of San Francisco and these 43,000 units will not help out first time homebuyers. Today the majority of tech hires are under 35 years of age and as this sector enters the marketplace, single-family homes will be non-existent at affordable prices and condos will also be hard to find. Families will have no other choice but to seek homes outside of the city, which will lead to more pressure on our transportation infrastructure. This lack of housing will also create more financial pressure on both our public and private schools as they compete for a smaller and smaller pool of children to be educated in the city.
Business owners will be faced with financial pressure to raise salaries in order to meet higher rental costs and provide enough financial benefit to a family wanting to work for their firm. This is all under the assumption that unless the aforementioned company is in the tech industry, business has possibly improved but not with the type of increase that will support higher rental rates let alone higher salaries.
This is San Francisco's financial cliff. Our city needs to find a way to balance the need for more immediate housing while also considering the long-term effect that a shortage of single-family homes and condos will cause. Home ownership must be encouraged and allowed: it is the basis of developing stronger communities and will prevent our city from becoming a home for transients who will come and go as the market shifts.
Posted 7 hours, 8 minutes ago on February 7, 2013
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