With land values in San Francisco falling, it creates an opportunity for the city to acquire sites in order to meet the state-mandated housing goals of creating 46,000 affordable units between 2023 and 2031.
Very few residential sites have traded hands in the city since the pandemic, however last week a fully entitled parcel at 25 Mason Street, on the border of the Tenderloin and Union Square neighborhoods, went up for sale through the online auction website Ten-X, the SF Chronicle reported.
The L-shaped property is fully entitled and permitted for a 150-foot tower with 155 units. The property was marketed for $13 million; however, the highest bid came in at $5 million, or $33,000 per buildable unit. The owner had set a “reserve price,” below which offers wouldn’t be accepted, at $8 million. In the end, the seller decided not to accept any offers.
Even if the seller received an offer for $8 million, that still would represent a sharp fall from the pre-pandemic years between 2015 and 2018, when entitled land fetched an average of $120,000 per approved unit, with many deals going much higher, according to the Chronicle.
The dampened demand comes as the city and its development partners need to go on a buying spree in order to even have a chance of meeting its state housing production goals. The city’s state-mandated housing element, which the Board of Supervisors will vote to approve in mid-January, requires that San Francisco plan for 82,000 units, 46,000 of which must be affordable to low- and middle-income families.
The issue with sites like 25 Mason Street may be its location as a gateway to the Tenderloin.
The directive from state housing officials is that new, low-income development, as much as possible, should be concentrated in “high-resourced” neighborhoods that have traditionally been hesitant to such housing. For that reason, as part of the housing element, San Francisco is looking to build in west side neighborhoods including the Sunset and Richmond districts, rather than in SoMa, the Tenderloin or Bayview, where low-income development has long been concentrated, the Chronicle reported.
Anne Stanley, spokesperson for the Mayor’s Office, confirmed to the Chronicle that “state funding priorities and Housing Element do emphasize projects in high-resource areas.” However, the city is still “open to opportunities and willing to consider site acquisition” on properties such as 25 Mason Street.
Dean Preston, the supervisor representing the Tenderloin, said he understands the focus on high-resource neighborhoods, but he feels the city should look at sites throughout San Francisco.
“I bristle a little when I hear about opportunities that the administration is not willing to look at because they are not in high-resourced areas,” he said. “We should be doing both. Getting the administration to acquire properties is like pulling teeth.”
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