San Francisco metro area's new apartment construction on the decline

A state-mandated plan requires San Francisco to create more than 82,000 new housing units by 2031, but apartment construction — a key method to building housing in bulk — has slowed in the metro area.

By the numbers: Developers have started construction on 229 apartments in the San Francisco area during the first two quarters of this year, compared to the 1,423 the area averaged in the first halves of each year beginning in 2013 through 2022, according to new data from CoStar.

• In the first half of 2022, developers broke ground on 1,846 multi-family buildings.

The big picture: To meet its deadline, San Francisco proper would need to permit an average of 28 new housing units every day through early 2031, the San Francisco Chronicle reports.

• Yes, but: The city is already behind. San Francisco has approved permits for a little under 10 units per day from Jan. 1 to July 15.

State of play: San Francisco's permitting process is notoriously slow, resulting in fewer new homebuilding permits issued since the pandemic.

• It took an average of more than 600 days to obtain a permit in 2022, according to a San Francisco Chronicle analysis of city permitting data.
• Meanwhile, San Francisco has the second-most expensive construction costs ($5,200 per square meter on average) in the world, according to a 2023 analysis from real estate consultancy Turner & Townsend.

• Earlier this month, the developer of a $1.2 billion mixed-use project in Hayes Valley suspended construction "until markets normalize and [it's] able to bring in early tenancy commitments, or a capital partner, or both," developer Arden Hearing told the San Francisco Chronicle.

What to watch: The city has recently sought solutions to reduce barriers in the city's permitting and approval processes to remove some density restrictions and more.