A stalled apartment project in San Francisco is getting a second wind after a new developer filed its own, larger housing proposal for the shuttered car wash site.
4Terra Investments, an Irvine-based developer, submitted plans last week to build a 203-unit apartment building in Hayes Valley, one of San Francisco's most popular housing markets. The proposal comes a few years after a previous developer, Genesis Real Estate, walked away from plans to build 184 units at the property at 400 Divisadero St., citing rising development costs and declining rents in San Francisco.
Genesis first filed plans in 2019, prior to the pandemic, and stopped submitting documents to carry out is plans in 2022.
Construction costs rose during the pandemic as the inflation rate hit record highs, according to a report by the Commercial Real Estate Development Association, with the cost of steel surging 22% nationally, while concrete rose 15% and lumber increased 16%. San Francisco rents, meanwhile, reached $3,100 per month in 2019, the highest since 2000, according to CoStar data. Those rents fell to a pandemic low of $2,700 in 2021 and gradually rose to the current average of $2,900.
4Terra entered a development agreement with the longtime owners of the car wash, Roy and Patricia Shimek, last fall, public documents show. The developer's plans are among the largest to be filed for Hayes Valley's multifamily market since the pandemic.
Hayes Valley’s hasn’t seen new supply since 2021, when 160 units entered the market. The “anti-development” neighborhood associations and zoning restrictions make it difficult for new projects to move forward, according to a CoStar analysis. The largest project in the works for the area is Freedom West 2.0, a 2,300-unit proposal at 820 McAllister St.
The greater San Francisco market has similarly experienced an apartment construction slowdown. Just 960 units were delivered in the past year, the lowest total since 2012, according to CoStar data.
