San Francisco inventory influx may not damper demand

Firm expects new condos to be in short supply moving forward
  • San Francisco will return to a "normalized supply" of roughly 1,000 condo deliveries in each of the next four years.
  • Condo deliveries will be concentrated in the southeastern portion of the city moving forward.
  • Some industrial land is being purchased in the city and being reused for condo projects.

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Pent-up demand for new condos will continue in San Francisco during the next four years despite a return to historical delivery volumes and a pipeline of proposed deals. This is the opinion of Garrett Frakes, managing partner of sales and marketing firm Polaris Pacific, who refutes the idea that 1,000 condo deliveries a year will erase the city's shortage of for-sale units. He explains that while the volume of condo deliveries will return to historical levels this year, only 200 to 250 units were delivered during each of the previous five years, thus pent-up demand will persist. "That (the delivery of 1,000 units this year) doesn't necessarily do much for us," Frakes said, explaining that of the units slated for 2016 delivery an estimated 50 percent have already sold. By the time these projects are completed its unlikely a significant number of unsold units will be available to impact supply. An uncertain pipeline of inventory When combining all of San Francisco's propos...