Monday, May 02, 2011

Drilling Piles at “Seventh & H” SRO

Foundation work began about a month ago on downtowns newest single-resident occupancy building at Seventh and H streets. Below I have captured the process of drilling steel-reinforced piles into the ground at a depth of 70 feet.

This $47.4 million project will house 150 units at a cost of $316,000 per unit. It was just the other day I saw the price tag per unit for the project at another news site and I was floored by this crazy number. Is this why so few units ever get built downtown without subsides? This price was expected during the last real estate boom of a few years ago, but this seems a little steep for a SRO. Were currently in a depressed real estate market but the cost to build in downtown does not reflect that. If it weren’t for both the state and city subsidies to give builders money to build downtown, not much would be built. What does that say about our market? This isn’t something new either; it’s been this way for over a decade and developers have adjusted their business pratices to reflect this. Now that our state and city are broke, will developers take a risk building downtown without government support?

Rendering of finshed building


nakanoc said...

Not sure if you read comments, but I am wondering why only one and two-bedroom condos/apartments are being built downtown. Do you know if the planning commission has ever discussed building larger homes (3-5 bedrooms) for families that want to live downtown? I would be very interested in living downtown but don't want to move into a house that's 100 years old and needs a ton of work. If yo uread this, you can email me at if you have any insight. Excellent blog, btw! I love reading it :)

Anonymous said...

Have to agree that in this depressed real estate market, it's appalling that it costs so much to build downtown.

My question is: why? I understand that there are significant costs involved that are greater than building in the suburbs - but is it possible that the property is overvalued?

I remember a similar issue with the planned "Warren" condos on 16th. Even with the discounts (listed as "Below Market Rate"), the value just isn't there - and neither is corresponding demand. So I question: who sets this "Market Rate" and why is it priced much higher than the market will bear?

And nakanoc - I agree, it would be great to see some multi-room units be built downtown. I'm sure that there are - and will be - a significant number of families looking to live in a new condo on the grid.

Zwahlen Images said...

nakanoc: I think the Towers, Aura and the Metropolitan all had 3 bedroom units planned but the cost at the time was around $700,000... so they were not priced for most families. The Planning Commission duties are to develop and maintain the General Plan; make recommendations to the City Council on amendments to the General Plan and the City’s zoning code and on zoning changes. I’m sure the PC would welcome plans for larger homes in downtown but it’s developers who do the research to see if there is a market for building them at a affordable market price. I think it’s the high final cost to build bigger homes in downtown that scares developers away. Maybe a board member on the commission could explain it?

Much of the higher costs to build downtown have to do with working in tight spaces with limited access, dealing with numerous utilities, high labor costs. confusing and inefficient work rules, counterproductive tax structures., strangulating regulation obtaining permissions and rights-of-way are the impacts of the work on neighboring structures and people. These impacts are increasingly affecting the cost of projects which is why building in downtown is not attractive to most developers without subsidies to help pay for the extra costs.

wburg said...

You can't build a mid-rise apartment building out of OSB and drywall, nor are urban downtowns located on cheap floodplain land. On the other hand, you don't have to build new roads and infrastructure for a building like this, costs that aren't included in the sale price of a suburban box. There are plenty of impacts and consequence costs to suburban development--but often they are paid indirectly, by other people or subsequent homeowners (like, just for example, greatly increased flood insurance costs because levees turn out to not be up to the 100-year standard after all.)

Some of the townhomes in Midtown and other parts of the central city are 3-bedroom, and considering the room sizes, it wouldn't be too hard to divide one up if you needed extra bedrooms. Some doubt the demand for townhomes and row houses, but existing properties like Metro Square and the ones on P Street and 13th etc. seem to sell pretty rapidly.

This project is studios and 1-bedrooms because it is intended for single individuals of low income, not families.

Although part of why it is so expensive is because each unit has its own kitchen and bathroom--those are the expensive parts of a housing unit (square footage is comparatively cheap.) They are replacing units that had shared kitchen facilities, and mostly had shared bathroom and shower facilities. Building units in similar fashion would have held down costs and probably increased capacity considerably, but it is considered unacceptable to build housing like that now.

A lot of developers focusing on the central city seem to assume that the big market for urban housing is DINKs and retirees, people without kids. This means they don't have to solve the problem of urban schools, which is one of the real barriers to keeping families in the central city (plenty of generations of kids grew up in those 2-3 bedroom homes.) Thus, the conventional wisdom is that the central city isn't for kids and families. Even if there are family-sized units, a lack of good schools will maintain the exodus once Junior hits school age.

Anonymous said...

Thanks for clearing up, guys! Always wondered what factored into the out-of-whack pricing. And wburg, excellent point re: urban schools. That's going to be something the city will need to address if they ever want to get families DT - not everyone can afford private when SCUSD's offerings aren't up to snuff.

John Lucas said...

Thank you for sharing. It looks like this project might have used pre drill pilings, correct? I'm not sure if it would have been necessary, but it sure looks like it to me.