4 ms·

$100/sqft to make residential projects viable? That’s quite low. They also say conversion would cost $1000/sqft, why would you need a million dollars to renovat

$100/sqft to make residential projects viable? That’s quite low. They also say conversion would cost $1000/sqft, why would you need a million dollars to renovate < 100m2? None of this adds up to me, appreciate if anyone has hard numbers for this.

baremetal 3y ago
As a general contractor, I can tell you $100/sf is about what "average" houses get built for in much of the rest of the country.
- sgc 3y ago
  That is maybe for the lowest cost, lowest quality houses in the US. See "Average Construction Costs of Single-Family and Multi-Family Residential Buildings Per Square Foot in the U.S." on [1] for costs within major cities, you will see that costs are much higher than that, even if not 1k psf. [1] https://www.togal.ai/blog/the-average-cost-to-build-a-house-in-2022 https://www.togal.ai/blog/the-average-cost-to-build-a-house-...
  - baremetal 3y ago
    Correct, I wasn't referring to custom homes.
vlovich123 3y ago
I think a huge part of that is getting things up to code because of zoning rules (eg minimum size of apartment, installing kitchens and bathrooms which requires adding plumbing that doesn’t exist, etc etc).
- throwaway173738 3y ago
  Yeah these buildings don’t have bulkheads or risers for plumbing every office. And the entire central air system has to be reworked. If it’s a concrete and steel building this is going to be a monumental undertaking to cut each floor up and run metal for every one of these changes.
pclmulqdq 3y ago
Those numbers are probably accurate. The reason it doesn't add up to you is that you aren't thinking about the actual costs of residential conversion or the math behind $100/sqft. The easy one: $100/sqft isn't $100/sqft for each apartment, it's $100/sqft of building. That means that you have to count hallways, lobbies, elevator shafts, mechanical spaces, internal walls, etc. All that adds up. The hard one: The $1000/sqft conversion cost. This comes down to the fact that residential and commercial buildings have very different floorplans. Commercial buildings keep the plumbing near the elevator shafts because it's more efficient, but residential buildings need much more extensive plumbing on each floor to give everyone a bathroom and a kitchen. Electrical metering and wiring also becomes a lot more complicated. You also have to do things like putting up walls and light fixtures (usually commercial tenants pay for that in the spaces they rent) and installing residential appliances. All of that adds up to a quite significant cost in a place like San Francisco, notwithstanding the costs for permits.
- ricardobeat 3y ago
  That’s all pretty logical, but doesn’t explain these numbers. The average construction cost in SF is reported to be $440/sqft, already the highest in the entire world. How could conversion cost more than double? There must be a lot more to it than the 20% “cost” of social housing.
dghlsakjg 3y ago
The $100 number is referring to the acquisition cost. Essentially, housing development is so expensive and risky in SF that the cost of the building has to be exceptionally low for there to be a chance of making an economic profit. So you need to be able to acquire it for cheap because the costs and risk to convert are estimated at $1000. These aren’t just construction costs, but things like hiring an army of bureaucrats to get the approvals from the city, and the possibility that you might have to wait several years to get started while the paperwork gets moving. Think of it this way: you have the opportunity to buy a house, except you can’t live in it for an indeterminate amount of time, it needs some renovations, you might have to rent the basement out at below market rates, and you still have to maintain it and pay the mortgage for however long it takes to sort all this out. So how cheap does that house have to be before you’re interested (and can talk a bank into backing you).
canucker2016 3y ago
from the article, "...I note that the cost of housing per square foot in Biloxi, Mississippi, one of the poorest cities in the country, with a median household income that is 60 percent below that of San Francisco, is $139 per square foot. And this is for a city that is not only poor but is chronically at risk of major flooding, which raises insurance costs and reduces home values. " So, San Fran residential real estate needs to be 28% cheaper than Biloxi?

baremetal 3y ago

As a general contractor, I can tell you $100/sf is about what "average" houses get built for in much of the rest of the country.

sgc 3y ago
That is maybe for the lowest cost, lowest quality houses in the US. See "Average Construction Costs of Single-Family and Multi-Family Residential Buildings Per Square Foot in the U.S." on [1] for costs within major cities, you will see that costs are much higher than that, even if not 1k psf. [1] https://www.togal.ai/blog/the-average-cost-to-build-a-house-in-2022 https://www.togal.ai/blog/the-average-cost-to-build-a-house-...
- baremetal 3y ago
  Correct, I wasn't referring to custom homes.

vlovich123 3y ago

I think a huge part of that is getting things up to code because of zoning rules (eg minimum size of apartment, installing kitchens and bathrooms which requires adding plumbing that doesn’t exist, etc etc).

throwaway173738 3y ago
Yeah these buildings don’t have bulkheads or risers for plumbing every office. And the entire central air system has to be reworked. If it’s a concrete and steel building this is going to be a monumental undertaking to cut each floor up and run metal for every one of these changes.

pclmulqdq 3y ago

Those numbers are probably accurate. The reason it doesn't add up to you is that you aren't thinking about the actual costs of residential conversion or the math behind $100/sqft. The easy one: $100/sqft isn't $100/sqft for each apartment, it's $100/sqft of building. That means that you have to count hallways, lobbies, elevator shafts, mechanical spaces, internal walls, etc. All that adds up. The hard one: The $1000/sqft conversion cost. This comes down to the fact that residential and commercial buildings have very different floorplans. Commercial buildings keep the plumbing near the elevator shafts because it's more efficient, but residential buildings need much more extensive plumbing on each floor to give everyone a bathroom and a kitchen. Electrical metering and wiring also becomes a lot more complicated. You also have to do things like putting up walls and light fixtures (usually commercial tenants pay for that in the spaces they rent) and installing residential appliances. All of that adds up to a quite significant cost in a place like San Francisco, notwithstanding the costs for permits.

ricardobeat 3y ago
That’s all pretty logical, but doesn’t explain these numbers. The average construction cost in SF is reported to be $440/sqft, already the highest in the entire world. How could conversion cost more than double? There must be a lot more to it than the 20% “cost” of social housing.

dghlsakjg 3y ago

The $100 number is referring to the acquisition cost. Essentially, housing development is so expensive and risky in SF that the cost of the building has to be exceptionally low for there to be a chance of making an economic profit. So you need to be able to acquire it for cheap because the costs and risk to convert are estimated at $1000. These aren’t just construction costs, but things like hiring an army of bureaucrats to get the approvals from the city, and the possibility that you might have to wait several years to get started while the paperwork gets moving. Think of it this way: you have the opportunity to buy a house, except you can’t live in it for an indeterminate amount of time, it needs some renovations, you might have to rent the basement out at below market rates, and you still have to maintain it and pay the mortgage for however long it takes to sort all this out. So how cheap does that house have to be before you’re interested (and can talk a bank into backing you).

canucker2016 3y ago

from the article, "...I note that the cost of housing per square foot in Biloxi, Mississippi, one of the poorest cities in the country, with a median household income that is 60 percent below that of San Francisco, is $139 per square foot. And this is for a city that is not only poor but is chronically at risk of major flooding, which raises insurance costs and reduces home values. " So, San Fran residential real estate needs to be 28% cheaper than Biloxi?