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I don’t understand how those things impacts each other. Are you saying that if old buildings didn’t have rent control then developers would build less profit ma

I don’t understand how those things impacts each other. Are you saying that if old buildings didn’t have rent control then developers would build less profit maximising buildings?

refurb 6y ago
If you only have 15 years of free pricing, then build the housing with the highest short term margins possible. If you have free pricing in perpetuity, then you can build housing that might have a lower margin near term but an overall high NPV over its lifetime.
- shuckles 6y ago
  I doubt this calculation changes whether a developer chooses $500 or $1000 countertops. New units in San Francisco are not luxury units. Few have luxury amenities like doormen.
  - TylerE 6y ago
    Aren't doormen pretty much only an NYC thing, anyway?
    - illirik 6y ago
      Chicago as well, at least buildings on Lake Shore Drive.
    - shuckles 6y ago
      NYC is one of the few places in the United States building truly luxurious condos. The per unit construction cost of new construction in San Francisco is probably within 20% of 100% affordable non-profit developer built subsidized housing (which runs at around $850k/unit).
  - refurb 6y ago
    Think more along the lines of amenities like pools, exercise rooms rather than more spartan buildings that are literally just basic apartments.
    - shuckles 6y ago
      Few San Francisco new constructions have pools, and I don’t see how putting some exercise equipment in what would otherwise be a storage closet makes a building luxury. That can’t be more than a few basis points of total project cost.
      - refurb 6y ago
        Pools are a bad example for SF, but here is an example of a luxury condo built in the last few years. I don't disagree that they don't add much to the cost, but they are high-margin offerings - people pay more rent for places that offer these. http://38doloressf.com/amenities/ http://38doloressf.com/amenities/ Amenities: LEED Gold certified, butterfly garden, outdoor living room with fire pit
        nemothekid 6y ago
        I'm not sure those are the amenities that would signify a high end apartment; which probably tracks with the dilution of the brand. Those amenities are pretty standard for most corporate housing, (ex. Avalon's 55 9th[1] has those amenities, but doesn't market itself has luxury). Compare that building with the 181 Fremont[2] in SOMA which has a several private lounges, a doorman, a building concierge, and valet parking. Several other building in that area, such as the Avery[3] do have pools. I'd consider that 181 Fremont would still be a luxury offering in a city like Chicago where the housing market isn't insane. However, despite the range the building offerings, most units still rent out for $55-75/sqft. [1] https://www.avaloncommunities.com/california/san-francisco-apartments/ava-55-ninth https://www.avaloncommunities.com/california/san-francisco-a... [2] https://181fremont.com/amenities/ https://181fremont.com/amenities/ [3] https://www.theaverysf.com/lifestyle https://www.theaverysf.com/lifestyle
  - jboog 6y ago
    "luxury" is one of the most meaningless and oft misused terms in housing/real estate. It's not legally defined as anything so any developer can build a shoebox with a bathroom and a murphy bed throw in a nice countertop and call it "luxury". It's also become a pejorative for ANY market-rate housing in cities by NIMBY anti-development types.
  - Talanes 6y ago
    Is there a functional difference between places that have a front-desk person and actual doormen, besides opening doors? Not that the former is super-common in San Francisco either, but it's at least existent.
    - m0llusk 6y ago
      Yes, receiving packages and deliveries has become an extremely valuable amenity.
      - Talanes 6y ago
        My main dealings with them were, in my most-cash strapped days, delivering Postmates orders to their buildings. They also serve the valuable service of not having to explain to the delivery guy how to get into the building. Much longer notes from the people whose buildings were not manned.
  - 8note 6y ago
    The difference between affordable and luxury housing is just the rent. It's the rent
- kelnos 6y ago
  > If you only have 15 years of free pricing What do you mean by that? Rent control in SF only applies to buildings built before mid-1979. New buildings built today, whether low-end or high-end, will not be subject to rent control now, or in 15 years. There was a 2020 ballot initiative to change that so buildings older than 15 years old could be subject to rent control on a rolling basis, but IIRC that failed. (And even if it had passed, that wouldn't explain the last 10+ years of predominately "luxury" building.)
  - shuckles 6y ago
    Not quite true. California passed statewide rent control at inflation + 5% in 2019. Now some have moved the goalposts and called that rent stabilization instead of control because it allow rents to increase. New construction is exempt, though.
    - nostrademons 6y ago
      I thought that was the difference between rent control and rent stabilization. https://www.apartmentguide.com/blog/rent-control-vs-rent-stabilization/ https://www.apartmentguide.com/blog/rent-control-vs-rent-sta... https://rentguidelinesboard.cityofnewyork.us/resources/faqs/rent-control/ https://rentguidelinesboard.cityofnewyork.us/resources/faqs/... Yep, those are the definitions. It looks like rent stabilization policies are frequently mis-termed "rent control", though.
      - deleted 6y ago
        [deleted]
      - shuckles 6y ago
        My point is that the layperson doesn’t appreciate the difference.

I don’t understand how those things impacts each other. Are you saying that if old buildings didn’t have rent control then developers would build less profit maximising buildings?

refurb 6y ago

If you only have 15 years of free pricing, then build the housing with the highest short term margins possible. If you have free pricing in perpetuity, then you can build housing that might have a lower margin near term but an overall high NPV over its lifetime.

shuckles 6y ago
I doubt this calculation changes whether a developer chooses $500 or $1000 countertops. New units in San Francisco are not luxury units. Few have luxury amenities like doormen.
- TylerE 6y ago
  Aren't doormen pretty much only an NYC thing, anyway?
  - illirik 6y ago
    Chicago as well, at least buildings on Lake Shore Drive.
  - shuckles 6y ago
    NYC is one of the few places in the United States building truly luxurious condos. The per unit construction cost of new construction in San Francisco is probably within 20% of 100% affordable non-profit developer built subsidized housing (which runs at around $850k/unit).
- refurb 6y ago
  Think more along the lines of amenities like pools, exercise rooms rather than more spartan buildings that are literally just basic apartments.
  - shuckles 6y ago
    Few San Francisco new constructions have pools, and I don’t see how putting some exercise equipment in what would otherwise be a storage closet makes a building luxury. That can’t be more than a few basis points of total project cost.
    - refurb 6y ago
      Pools are a bad example for SF, but here is an example of a luxury condo built in the last few years. I don't disagree that they don't add much to the cost, but they are high-margin offerings - people pay more rent for places that offer these. http://38doloressf.com/amenities/ http://38doloressf.com/amenities/ Amenities: LEED Gold certified, butterfly garden, outdoor living room with fire pit
      - nemothekid 6y ago
        I'm not sure those are the amenities that would signify a high end apartment; which probably tracks with the dilution of the brand. Those amenities are pretty standard for most corporate housing, (ex. Avalon's 55 9th[1] has those amenities, but doesn't market itself has luxury). Compare that building with the 181 Fremont[2] in SOMA which has a several private lounges, a doorman, a building concierge, and valet parking. Several other building in that area, such as the Avery[3] do have pools. I'd consider that 181 Fremont would still be a luxury offering in a city like Chicago where the housing market isn't insane. However, despite the range the building offerings, most units still rent out for $55-75/sqft. [1] https://www.avaloncommunities.com/california/san-francisco-apartments/ava-55-ninth https://www.avaloncommunities.com/california/san-francisco-a... [2] https://181fremont.com/amenities/ https://181fremont.com/amenities/ [3] https://www.theaverysf.com/lifestyle https://www.theaverysf.com/lifestyle
- jboog 6y ago
  "luxury" is one of the most meaningless and oft misused terms in housing/real estate. It's not legally defined as anything so any developer can build a shoebox with a bathroom and a murphy bed throw in a nice countertop and call it "luxury". It's also become a pejorative for ANY market-rate housing in cities by NIMBY anti-development types.
- Talanes 6y ago
  Is there a functional difference between places that have a front-desk person and actual doormen, besides opening doors? Not that the former is super-common in San Francisco either, but it's at least existent.
  - m0llusk 6y ago
    Yes, receiving packages and deliveries has become an extremely valuable amenity.
    - Talanes 6y ago
      My main dealings with them were, in my most-cash strapped days, delivering Postmates orders to their buildings. They also serve the valuable service of not having to explain to the delivery guy how to get into the building. Much longer notes from the people whose buildings were not manned.
- 8note 6y ago
  The difference between affordable and luxury housing is just the rent. It's the rent
kelnos 6y ago
> If you only have 15 years of free pricing What do you mean by that? Rent control in SF only applies to buildings built before mid-1979. New buildings built today, whether low-end or high-end, will not be subject to rent control now, or in 15 years. There was a 2020 ballot initiative to change that so buildings older than 15 years old could be subject to rent control on a rolling basis, but IIRC that failed. (And even if it had passed, that wouldn't explain the last 10+ years of predominately "luxury" building.)
- shuckles 6y ago
  Not quite true. California passed statewide rent control at inflation + 5% in 2019. Now some have moved the goalposts and called that rent stabilization instead of control because it allow rents to increase. New construction is exempt, though.
  - nostrademons 6y ago
    I thought that was the difference between rent control and rent stabilization. https://www.apartmentguide.com/blog/rent-control-vs-rent-stabilization/ https://www.apartmentguide.com/blog/rent-control-vs-rent-sta... https://rentguidelinesboard.cityofnewyork.us/resources/faqs/rent-control/ https://rentguidelinesboard.cityofnewyork.us/resources/faqs/... Yep, those are the definitions. It looks like rent stabilization policies are frequently mis-termed "rent control", though.
    - deleted 6y ago
      [deleted]
    - shuckles 6y ago
      My point is that the layperson doesn’t appreciate the difference.