San Francisco Apartment Projects Stall as Mandated Goal Looms

Upwards of 20,000 apartment units in San Francisco are in limbo as projects face years of delays or fall by the wayside entirely.

Only 1,453 housing units were completed last year, representing less than a third of the more than 5,000 delivered in 2020. Last year, plans were filed for just 2,541 new homes. Meanwhile, the city is way behind on its state-mandated goal of permitting 82,000 units by 2031 as part of its Housing Element.

Residential developments like Treasure Island, Mission Rock and 5M added hundreds of housing units during the pandemic. But apartment starts have largely stalled in recent years as developers deal with inflation, city fees, a construction materials shortage and tariffs.

Consider FivePoint Holdings’ Hunters Point Shipyard and Candlestick Point developments. More than 10,000 homes were approved for construction in 2010, but environmental hazards and other setbacks have kept the projects in limbo. The following year, Parkmerced was approved for 5,600 new units, but construction was pushed continually before falling by the wayside entirely during the pandemic.

A mixed-use project was set to rise at 655 Fourth Street in South of Market in 2020 but was revised and approved in 2023 for 1,110 housing units, plus office space. Like other major developments in SoMa, that project has yet to get off the ground. Nearby, other projects like 88 Bluxome and the San Francisco Flower Mart are seeking plan revisions that could include an increased focus on housing as office demand in the city claws back from pandemic lows.

UCSF’s Power Station development

Construction at the Power Station mixed-use development in Dogpatch is about to take a big jump forward.

Associate Capital and the University of California, San Francisco will start construction next week on an eight-story, 300,000-square-foot cancer center that will provide proton therapy and other health services to patients. UCSF bought the 50,000-square-foot parcel from Associate Capital in the spring for $75 million.

Construction will be funded in part by up to $575 million in tax-exempt, fixed-rate revenue bonds from the California Infrastructure and Economic Development Bank. Costs are estimated to be about $400 million.

The first tranche of housing at the Power Station development, the 105-unit Sophie Maxwell affordable housing project, is slated for delivery in October. Up to 2,600 homes and 1.6 million square feet of space are approved for the site.

Madison Capital’s swing for crypto HQ

Madison Capital is making a play on one the largest cryptocurrency headquarters in San Francisco.

The New York-based investment firm bought a loan from Affinius Capital backed by 600 Battery Street, a 125,000-square-foot building near Jackson Square currently serving as the corporate home of crypto company Ripple. The sale price of the loan hasn’t been disclosed, though Madison is thought to have spent more than $80 million, according to the San Francisco Business Times.

Affinius predecessor Square Mile Capital originated a $106.2 million loan for the property in 2019 when TMG Partners and Invesco acquired the building for about $115 million, or $920 per square foot.

Ripple planted its flag at 600 Battery in 2022 when it leased the whole three-story building for its headquarters. It will stay in its space at the site.

With Madison now owning the building’s debt, it could be well positioned to buy the building outright.

San Jose’s ADU condo sale

For the first time ever in California, homeowners can sell accessory dwelling units as standalone condos.

The city of San Jose approved a backyard ADU on Joséfa Street near downtown to be sold as a condominium, utilizing Assembly Bill 1033 to make the sale happen. AB 1033 became state law last year, and San Jose was the first large city in the state to adopt the law last July.

Mayor Matt Mahan called the sale a “proof of concept for California.”

The ADU was developed by Bay Area real estate firm AlphaX RE Capital. San Jose has permitted 1,500 ADUs since 2022 and issued final building permits for more than 1,110.

Carmel Highlands price record

A mansion in Carmel Highlands featured on film and television is listed for an eye-popping price.

The estate at 157-163 Spindrift Road is asking $91.2 million — $7,600 per square foot and more than double the record for the most-expensive sale in Monterey County. A $45 million home in Pebble Beach set the bar last year.

The property was featured in the 1992 thriller “Basic Instinct” as well as an episode of the HBO series “Big Little Lies,” which was set in the nearby seaside enclave of Monterey.

The property consists of five parcels spanning 5.4 acres and six houses, including a 12,000-square-foot main house, four cottages and a new one-bedroom abode. Colorado-based software entrepreneur Gary Vickers and his wife Kerry Vickers are the sellers of the property that once belonged to world record-holding aviator Steve Fossett.