Bozzuto and Kimco Begin Daly City Apartment Construction

Daly City’s first market-rate apartment project in 15 years is officially underway.

Bozzuto and Kimco Realty have broken ground on its 214-unit mixed-use development replacing a former Burlington Coat Factory at Westlake Shopping Center, the San Francisco Business Times reported.

The groundbreaking comes amid a slowing market for new apartment construction. Apartment starts in the region have fallen to just a few hundred per quarter from more than 3,000, per the Business Times. It aligns with a nationwide trend of 542,800 units under construction at the end of the second quarter — the lowest level in a decade, according to RealPage data cited by the Business Times.

The project from Bozzuto and Kimco’s joint venture, known as The Chester at Westlake, calls for a five-story mixed-use building that will house studios, one-, two- and three-bedroom apartments, most of which will come equipped with balconies or terraces. Residents will have access to 13,000 square feet of amenities as well as nearly 10,000 square feet of ground-floor retail.

Artificial intelligence’s growing influence on the Bay Area has so far manifested in companies flocking to the region and setting up offices. Employees have followed, bringing in new renters to the Bay Area. With an expected influx of tens of thousands of AI workers over the next five years, office vacancy in San Francisco alone is predicted to be cut in half, according to CBRE.

The AI boom didn’t play a part in The Chester at Westlake’s construction, as Bozzuto began studying the site three years ago.

“I was bullish on Daly City,” Bozzuto president and CEO Toby Bozzuto told the Business Times. “The AI jobs and the broader resurgence — that’s just the icing on the cake.”

Bozzuto and Kimco are pursuing the project with financing from J.P. Morgan and a plan to use wood-frame construction and non-union labor as a means of lowering construction costs. In the Bay Area, most apartments are built for about $600,000 per unit, making new multifamily construction unfeasible for many developers.

Current vacancy in San Mateo County is approaching a 20-year low at approximately 4 percent, per CoStar data cited by the Business Times. Rents, meanwhile, have risen 5 percent in the past year — the quickest spike since 2022.

The Chester at Westlake is scheduled to open by the end of 2027.

— Chris Malone Méndez