Large-Ticket Development Jobs Dry Up in Downtown SF

Big construction projects in Downtown San Francisco have stalled, leaving carpenters, plumbers, painters and other professionals and tradespeople short of work.

Big-ticket permit applications at the city’s Department of Building Inspection have plummeted, as office, apartment and tenant improvement projects in the Financial District have been put on hold or canceled, the San Francisco Chronicle reported.

The statistics only include jobs worth $5 million or more. From January through August, builders filed for 42 such permits, worth a total of $1.4 billion in electrical, plumbing and building jobs.

It’s on pace to rival 2020, when pandemic lockdown rules didn’t allow for nonessential construction, which included commercial and retail projects. That year there were 60 big-ticket permit applications totaling $1.3 billion.

Last year, 86 such permit applications were filed, for $2.9 billion in work.

The number of big construction projects this year is on track to be 70 percent less than 2018, when 184 permits were pulled for projects in excess of $5 million, for $7.3 billion worth of jobs.

Construction industry leaders blame the steep decline in construction on a drop in tenant improvement projects related to office leases.

With office buildings still at less than 50 percent capacity and a majority of Financial District workers operating remotely much of the week, San Francisco saw 2.6 million square feet of office leasing through June, on pace to end the year with about 5 million square feet.

That’s less than the 6.5 million square feet of leasing that took place last year and fewer than the 11 million square feet of deals completed in 2019 or the 13 million in 2018.

Workers who rely on tenant improvements – architects, carpenters, electrical contractors, drywallers, painters, plumbers, movers and HVAC technicians – are hustling to make up for lost income.

There are now 1,300 union construction workers out of work in San Francisco, according to Rudy Gonzalez, secretary-treasurer for the San Francisco Building Trades Council.

“For some crafts, (tenant improvements) may be one-third of their hours and for others it might be half,” Gonzalez told the Chronicle. “Most of that work has dried up.”

Patrick O’Riordan, director of the Department of Building Inspection, said the construction business is boom or bust.

The permitting slowdown is still busier than it was in 2010 and 2011, when the city was recovering from the Great Recession. In 2010, the city saw 28 permit applications for work that exceeded $5 million, for a total of $728 million in work.

“Everyone who has ever worked in construction knows it’s a cyclical business,” O’Riordan said. “As a former carpenter, I know this cycle firsthand.”

— Dana Bartholomew

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