Since I’m in the rental business, I thought it would be worthwhile to take a look at the rents – though I tend to obsess over all buildings and not just rental ones.
Firstly, the project has a total of 709 apartments and 178 different unit types because of the architectural variations in the building. Of these units, 142 of them (20%) have been designated as affordable and were offered up via a lottery to people who fall within certain incomes ranges.
Recently Priceonomics posted a piece on San Francisco’s “rent explosion.” In it, was the infographic above showing the median rental rate for a 1 bedroom apartment in the city. The most obvious takeaway is that San Francisco is real expensive. In the core of the city, you’re easily looking at $3,000 per month.
That is with one exception: the Tenderloin (the green area just northwest of SOMA in downtown). The first time I ever visited San Francisco, I actually stayed on the outskirts of this area, which is a neighborhood well known for seediness, homelessness, crime, drug trade, strip clubs, and so on. And it was actually named after a similar neighborhood in New York that was also a center of vice in the late 19th and early 20th centuries.
But when I saw this diagram, I immediately asked myself: How could it be that the Tenderloin was holding out so well against the forces of gentrification? How is this island of seediness being preserved in the center of downtown? Particularly in a city like San Francisco where there’s a perpetual housing supply shortage and lots of wealth. The Tenderloin has some of the lowest rents in the city.
I don’t know the exact numbers, but Curbed New York speculated – based on what was seen at other buildings on the west side – that the total number of applicants for these 142 units may have reached over 100,000!
For the market-rate units, the average monthly rents are as follows (via Curbed NY):
Studio: $2,770
One-bedroom: $3,880
Two-bedroom: $6,500
Three-bedroom: $11,000
Four-bedroom: $16,500
I wasn’t able to find average unit sizes (to calculate per square foot rents), but I estimate the overall average unit size to be around 1,000 square feet.
940,000 sf (total gross floor area) - 45,000 sf of retail x 0.80 efficiency (lower than average because of the shape of the building) / 709 units = approximately 1,000 sf of rentable area per unit. That’s just my rough guess based on what I could find online.
If anyone has any additional figures, please share them in the comments below. I think there are a few subscribers to this blog who are involved in the project.
So I tweeted the good folks at Priceonomics and they responded with this article. It’s a few pages long, but the reasoning seems to come down to the following: active community groups that fought to keep developers out of the area (and that also own many of the buildings), downzoning, and a high percentage of rooming houses. According to that same article, the Tenderloin contains approximately 100 single room occupancy residential hotels (or SRO’s as they’re called). These were initially built to house the city’s transient and seasonal population after the great fire of 1906.
So it would appear that there are some significant barriers to entry.
But at the same time, it generally seems like a bad idea to concentrate poverty, homelessness, drug users, and so on. Interestingly enough, the article talks about how when the Bay Area’s transit system went on strike for a period of time, the supply of drugs actually dried up in the Tenderloin. This underscores how regional the drug business is, but also makes me think that dealers are almost surely benefiting from the clustering of their client base.
In any event, this is a much larger problem than just a real estate development one. I don’t know what the solution should be, but I’m pretty sure that things are being made worse by concentrating everything in one neighborhood and by rising income inequality in the city. Inequality seems to lead to all kinds of negative externalities and, from my experience, mixed-income neighborhoods perform better than 100% poor ones.
