Pulse Of The Market (Pulse 79 - Unintended Consequences)
May 10, 2010
Market and economic forces influence condominium supply and demand and thus prices. Sometimes political forces trump market and economic forces with unintended consequences.
It takes a plot of land, a good design, lots of capital, and marketing & sales expertise to build a significant condominium development in San Francisco. It also takes a big dose of political shrewdness.
Developers start out to make money. There is never a guarantee, and in the last few years, there was probably more money lost than made. Though a developer may suffer (or benefit) from the machinations of the Planning Commission and Board of Supervisors, often overlooked is the impact on those who happen to be spectators to the unfolding drama.
555 Washington Street
555 Washington Street is (or was) a 38-story, 248-unit condominium development proposed for a site next to the Transamerica Pyramid.
This development went down in flames by a 10-to-0 vote of the Board of Supervisors at their April 20, 2010 meeting.
Planning Commission Ok
In March the Planning Commission, supported by its professional staff charged with researching these matters, evaluated the Environmental Impact Report (EIR) and determined that the project’s EIR was adequate, accurate and complete.
In killing the deal, the President of the Board of Supervisors, David Chiu, commented that the “EIR is fatally flawed – it doesn’t acknowledge the significant cumulative impacts of wind, of shadows, on transportation, on parking, on transit, on aesthetics.” Other opponents said the developer did not adequately address such issues as the creation of new shadows, wind tunnels, the effect on migrating birds (wouldn’t the birdies have adjusted by now to the Transamerica Pyramid next door?), the fate of nearby redwood trees, etc.
Would you say there is something is wrong with this picture?
This wasn’t about finding ways to fulfill San Francisco housing needs. Rather it was about City politics at its worst. The San Francisco Business Times expressed its opinion on April 23rd.
It’s tough being a private developer. It’s so easy to beat up on them. The 555 Washington development would have added 248 units to the existing 2,099 condominiums that make up the Seven Sisters of San Francisco condominiums. That would have been a 10%+ addition to this housing stock (almost 1% of the City’s total condominium stock) - incremental supply that will not happen. The unintended consequence may be a 5%+ uptick in appreciation for those existing Seven Sisters condominium owners. Existing owners should be happy: future buyers probably not. Was this the Board’s intention? Doubt it!
Written by: Malcolm E.A. Kaufman
Starboard TCN is posting this article on its website and blog with Malcolm
E.A. Kaufman's approval.
Malcolm E.A. Kaufman is Founder of PulseFactors™ LLC. He refers you to his
website, www.pulsefactors.com, where you can see recent issues
of Pulse of the Market© and learn more about him. He invites your comments,
suggestions, and questions.