200,000 housing units in Bay Area pipeline. Is it enough to move the needle?

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Equity Residential’s Potrero project includes 453 units and 26,000 square feet of retail.

by Emily Fancher –

There are 200,000 housing units in the planning pipeline or under construction throughout the Bay Area and approximately 43 percent of those are rental units.
The housing pipeline number, which was reported by a Bay Area real estate consultancy, includes market-rate and affordable projects in San Francisco, the East Bay, Peninsula and Silicon Valley down through San Jose.
The report, created by the Concord Group, predicts that developers will bring to market 18,000 units over the next five years in San Francisco.
The 200,000 units in the pipeline are an increase relative to the size of the pipeline historically. However, relative to the population and the size of the housing stock, the pipeline is fairly modest.
“It’s not going to move the needle that much,” said Tyler Evje, an engagement manager at the Concord Group, who worked on the report.
If you think about the pipeline, there are roughly 200,000 units in the core and 2 million households that live there, he said. So if 10 percent of existing stock is in the pipeline, that’s not that much, he added.
Much of the housing in the pipeline won’t get built or will be built gradually over a very long timeline.
“Many units in the larger projects will have a 10-to-15-year build out or have questionable financing or questionable entitlement (prospects),” said Evje.
The report also dives into the shift from rentals to for-sale units and flexible entitlements. Developers are now seeking approvals for both.
“It’s clear from the statistics that rent growth has been the focus of developers working through the planning process over the last 36 months – 69 percent of San Francisco’s approved projects are slated to be rentals,” according to a blog on the San Francisco Housing Action Coalition website from the Concord Group on the report.
“However, the new data suggest flexibility is the game plan for the next round of projects,” the blog said.
Only 15 percent of the projects currently undergoing entitlements are confirmed rental projects. Thirty percent are planned for-sale, but more than half are undecided on tenure or are pursuing dual entitlements, the blog said.
Evje said the Bay Area is usually either a strong rental market or for-sale market.
“Right now it’s an unprecedented time where both markets are extremely hot.”
Not surprisingly, most of the activity is in San Francisco’s SoMa, Mid-Market and in San Jose. Very little is in places such as Oakland and the Peninsula, because of the difficulty of finding sites or securing financing in those locations.

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