A 23-story apartment tower proposal in downtown San Francisco is among the first signs that developers are moving to take advantage a recently-enacted housing law aimed at spurring development through a streamlined approvals process.
Attorneys for the locally based company Keller Grover submitted a notice of intent to invoke the legislation for a 200-unit apartment tower at 1965 Market St., more than double the size of the developer's prior, 93-unit project proposed in 2016 for the site. If a formal proposal is filed, the revised project would be the first to utilize the 2023 California law meant to fast-track approval for housing projects and increase the number of residential units in the supply-constrained state.
The law, introduced by Sen. Scott Wiener, requires cities to streamline residential proposals if behind on housing development, according to previous reporting by CoStar News. San Francisco is mandated by the state to have a plan to build 82,000 new residences, one of the highest requirements in the state, between 2023 and 2031.
Keller Grover acquired the 0.4-acre site that currently holds a 15,000-square-foot office and retail building in 2016, and pitched an 8-story apartment project in its stead. That proposal stalled in the approval process, before being abandoned, according to reports.
San Francisco has the slowest housing approval timeline in the state at 605 days, according to a study. That, coupled with the city's higher housing mandate, makes San Francisco subject to an annual progress review while other cities undergo evaluation every four years.
The legislation is estimated to cut the city’s approval timeline from two years to six months, by eliminating the need for sign off from the planning commission and certain environmental reviews.
While San Francisco is the only city not on track to meet goals, language in the law appears to signal that more than a dozen other California localities are subject to the legislation. Jurisdictions that do not have a plan to achieve housing goals certified by the state are also subject to streamlined approval.
Wealthy suburbs like Atherton and Palo Alto are among those still waiting for their goals to be signed off, according to data from the Department of Housing and Community Development. Other cities have until 2027 for the state to review their progress.
The bill requires apartment projects with more than 11 units reserve 10% of units as affordable, or for renters making 50% of the area median income, or 80% for owners.
Officials in a recent press conference cited San Francisco's lower-than-expected housing pipeline as an indication that it isn't on track to meet those requirements. San Francisco approved plans for 3,039 units in 2023, according to data from the city’s Planning Department; that pace puts it on track for 24,312 houses by 2031.
Even when projects are approved, they are still being built at a slower rate than in previous years. Construction completions in San Francisco remain below pre-pandemic levels, according to CoStar data. Roughly 1,700 units were added to the city’s supply in the past year, compared to the previous five-year average of 2,100 units.
There are 3,400 units under construction, the lowest figure since 2021 and less than half of the 8,400 units under construction about a decade ago.
Keller Grover’s proposal is among the largest apartment projects for the city's Mission neighborhood, one of the largest multifamily markets in the region by inventory, according to CoStar data. In another large proposal for the downtown region, San Francisco-based Bayhill Ventures' aims to build 165 rental units at 530 Howard St.
