It’s just the latest example of city leaders shifting plans to favor homebuilding as residential real estate overtakes commercial
A recent pivot in the plans for a development project on San Francisco's bayside waterfront could be the latest sign that local developers are ready, once again, to bet big on housing. The City’s Port Commission earlier this month approved a request from the project’s developer, Strada Investment Group , to split up the firm’s proposal to build housing and office space on a pair of neighboring sites that lie along the Embarcadero and are owned by the Port of San Francisco.
The change, first reported by the San Francisco Business Times, will allow work on the proposed 618-unit residential buildings for Seawall Lot 330 to move forward. It does so by severing off the office project, which calls for the creation of a 375,000-square-foot office building on Piers 30-32 — just across the Embarcadero from the Seawall lot. Under the newly approved development agreement, the office project will be placed on hold for at least the next 18 months. Strada Founding Partner Jesse Blout told The Examiner that the decision to pause the office building development is, in part, a response to continued weakness in San Francisco’s commercial real-estate market, which still has not recovered from the disruptions brought by the COVID-19 pandemic. While employees have begun to return to in-person work in larger numbers, San Francisco's downtown vacancy rate remains well above 30%, according to a recent report from Cushman & Wakefield."We're pretty bullish on San Francisco's residential market,” he said. The Seawall lot in San Francisco’s South Beach area covers 2 acres wedged between the Embarcadero, Bryant and Beale streets. The proposed residential buildings would include nearly 200 affordable units set aside for low-income renters and 13,000 square feet of ground-floor retail. The decision to advance the Seawall residential development without the office building reflects the changing fortunes of San Francisco’s homebuilding industry, which largely ground to a halt over the last three years in the face of steady pressure from high interest rates and construction costs.Ex // Top Stories Raise a glass for national parks at Presidio beer festival Parks4All: Brewfest fundraiser runs from noon to 4 p.m Saturday 'Godfather of Skate' turns Presidio hangar into roller rink Pop-up celebration runs through Saturday and includes special themes for every evening skating session Lurie, legislators strike deal on shelter location law San Francisco legislators have struck a deal with Mayor Daniel Lurie on a law that would promote distribution of new homeless shelters throughout The City. As one standout example of housing market strength, Blout pointed to Strada’s rollout of the Quincy, a 501-unit apartment building at 555 Bryant St. In the few short months since the building’s May opening, Blout said that already half of its dwellings have been leased out, “which in that timeframe is really unprecedented.” Further confirming that demand for San Francisco housing is on the rise, The City's apartment rental prices — which had stalled out for several years after the pandemic’s start — are now increasing rapidly. The higher rental rates are helping to balance the financial math for new housing projects, even as they also place renters under increasing cost pressure.Strada’s request to delay the portion of the development project set for Piers 30-32 did come as a disappointment for some Port commissioners, who said they are eager to see commercial life returned to the 13-acre site. Nevertheless, Strada’s proposal was approved unanimously during the Commission's July 8 meeting. Port official Wyatt Donnelly-Landolt told commissioners that the plan to decouple the two development projects is now “the best path forward, given the challenging situation” in San Francisco's commercial real-estate market as well as The City’s urgent need to build more housing. Under the newly approved development agreement, Strada and the Port will spend the next 18 months reviewing the Piers 30-32 project and working to come up with ways to make it financially viable. Blout told commissioners that his firm is still “very invested in finding the solution” that will allow the project to move forward. In addition to the proposed office building, the development plan also includes new recreation and maritime facilities, as well as infrastructure improvements for The City’s seawall and for the piers themselves. This is not the first time this year that San Francisco leaders have changed course to accommodate the recent shifts in the local real-estate market. In March, the Board of Supervisors approved changes to a development plan for a portion of the SoMa neighborhood by removing requirements that had favored the creation of new office space.
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