Will rising construction costs choke the Bay Area's development pipeline?

In this article, the San Francisco Business Times highlights something that BUILD has been experiencing on the front lines throughout 2016: construction costs are high and rising to rates that are making development tough to underwrite.

BUILD's managing director, Lou Vasquez, helps explain in this article how first, the Bay Area lost a lot of its construction labor during the Great Recession and then, large projects such as the TransBay Transit Center and Apple's Cupertino campus have occupied huge numbers of sub-contractors and construction workers. As developers try to push forward their housing projects, contractors are in hot demand and keep raising prices. Ultimately, projects become too expensive to build and are put on ice. Ironically, as housing projects stall, rent continues to increase and the region becomes less and less affordable for the construction workers needed to build the housing (and everyone else). 

As with all market cycles, this one is likely to come down as the megaprojects finish up and the construction market cools. 

Read the full article here.

 

Source: http://www.bizjournals.com/sanfrancisco/bl...