In this era of widespread downtown redevelopment, it’s easy to find before/after scenarios that effectively demonstrate how Floor Area Ratio (FAR) works to capitalize on an increasingly valuable piece of urban land. Typically, all one has to do is compare a photo of a forlorn part of a big city’s downtown in 1995 and compare that same location with a photo from 2015. Sometimes we can even use a ten-year interval, manifested through the archived photos from early Google Street View, compared with the most recent iterations. Take this example in the fashionable Fountain Square neighborhood just southeast of downtown Indianapolis. Lots of mid-rises replacing either low-rises or mere parking lots.
It’s pretty basic, really: if developers have the opportunity, they will typically seek to maximize their revenue-generating opportunities by building upward, and they’re far more likely to pursue this on a high-value piece of land than on a low-value one. Sure, it costs more to build taller, but they usually have far more to gain through the economies of scale: by extruding, the developers are creating more opportunity to capitalized space on that humble little parcel. Therefore, the squat, underwhelming one-and two-story buildings that proliferated in distressed urban centers during the 1970s and 80s—a low point for urbanism in the U.S.—now sit on desirable urban parcels, and most developers can find something far more useful than, say, an ailing old drive-thru restaurant or an uninspiring little strip mall. The developers demolish the old building and construct a three- or four-story (or five or six) apartment building, with retail on the first floor. In an era when downtown living is tres chic and these new denizens want to walk to their amenities, a drive-thru Wendy’s is not the highest and best use of land. And even in cities with very high automobile dependency—places that will need parking to support a multi-story building—a Floor Area Ratio of 3.0 or 4.0 is still perfectly when in reach.
Now, if you’re the most expensive city in the country, the opportunities to capitalize might just be a bit more extreme.
On the edge of San Francisco’s financial district, a beige (sandstone?) building sprouts up on the top of a brick one. The historic name of the brick structure is the de Young Building, though most locals referred to it as the Chronicle Building, since the Burnham & Root-designed 1890 structure—San Francisco’s first skyscraper—housed Henry de Young’s publication, the San Francisco Chronicle, which remains the city’s newspaper of record to this day. The Chronicle relocated in 1924, and the de Young Building’s fortunes slowly declined by mid-century, to the point that, in 1962, the owner clad the mighty brick with aluminum and porcelain panels, which remained on the structure until 2004.
Then, three years later, the Ritz-Carlton (current owner) converted it into the Club and Residences, expanding its Floor Area Ratio from approximately 11.0 to 24.0.
That’s right: the investment nearly doubled the total leasable area. I use the qualifier “approximately” because I don’t think it’s a perfect 24.0 anymore; since the expansion floors are offset from the de Young Building’s floorplate (no doubt to make this expansion less intrusive), it’s not replicating the scale of the original eleven floors. And these setbacks help minimize the visual impact of the addition from the street level, even if architecture critics have formed a different conclusion about the overall result.
That said, regardless of what one thinks about the outcome, the resulting Ritz-Carlton Club and Residences is a remarkable achievement from a Floor Area Ratio standpoint: an existing structure, designed well before the automobile, can support a complete overhaul and thirteen additional floors, with no additional parking provision on the parcel. No tiny surface lot. Clearly this development owes a great deal to the high population density and above-average transit of San Francisco. And those conditions, in turn, owe much to the high land values of this geographically constrained metropolis. Or is it more that the high land values are a byproduct of density and good transit provision? No matter. It’s not an addition we can expect to see in anything other than alpha cities, which may only include New York City at this echelon. Historic preservationists will continue to cavil about the non-conforming, uninspired stacking of all those extra floors, but the de Young Building a triumph of added value, further supporting the notion that—as long as legal constraints are light and the market will bear it, the average developer would happily recreate Babel in a city whose demand and appeal transcends cultures and languages.
13 thoughts on “Floor Area Ratio in San Francisco: that city cannot be surpassed—but it can get topped off.”
This is an illustration of why allowing ever more dense zoning by right in the superstar cities will only serve to accelerate the price of housing.
Creating more supply in places where there is a seemingly endless “waiting list” of high income people ready to move in will not make those cities more affordable.
Housing that becomes affordable as older stock moves down the value chain will happen in the superstar metros…but it will be more of the “drive until you qualify” sort. The closer, older suburbs and satellite cities that are closer to the core will not fall down the chain too far before it is swept up in private redevelopment.
You may be right, Chris, but that does not augur well for these cities ever being affordable, since kowtowing to the endless demand is still a better (less bad) solution than constraining it, which is the case throughout much of San Francisco…where single-family detached or semi-attached housing predominates in areas that could clear support 30 and 40 story skyscrapers. If measured exclusively by demand, San Francisco should–at the very least–have a skyline on par with Vancouver, BC. While its supply of office buildings probably surpasses Vancouver’s (it is a much bigger metro), it’s multi-family residential does not.
The other problem is that SF’s socioeconomic portfolio is so ridiculously skewed toward the ends of the bell curve that the only situation that seems readily available for “the older stock to move down the value chain” is to go into SRO (single-room occupancy), a step above homelessness among the seedy “hotels” that predominate in the Tenderloin neighborhood, which today is basically the only neighborhood that consistently accommodates lower-income people. I can’t help but think if building codes in SF (or NYC) allowed for something a step up–not single-room occupancy, but scores of multifamily studios on par with the “tiny house” model of 150-250sf, they’d find a huge moderate and middle income demographic eager to take these units. Another approach might be suites, where four studios cluster around a shared bathroom. But the NIMBYism of San Francisco (more intense even that elsewhere) and building codes have long constrained the multifamily market from the adaptability of NYC. And certainly a far cry from Tokyo or Singapore, which is a shame, since the Asian model should have real viability in SF–especially given how many investors are coming from alpha cities across the Pacific pond.
The other option, of course, is for the housing bubble to burst. And since the culture in San Francisco seems unwilling to reform itself, I see this as the more likely outcome. The tech nerds don’t HAVE to live in the Bay Area anymore, and those who actually want a yard in which to raise more than one child can easily do the same work in Phoenix or Vegas or Boise. Or maybe Oakland (which still has some fixer-upper houses in rough neighborhoods that go for less than $500K) will continue to capitalize on its comparative lack of elitism.
There are not many places in the US that have the combination of climate and proximity to ocean and mountains that coastal California has.
Aside from techies, there is a seemingly endless supply of people who want a piece of the Golden State. Since my family lived there in my teen years, the state population has doubled, as has the population of the LA CSA.
But the Bay Area has only increased by 67% in the same period. I’d guess that’s partly due to growth/density restrictions, so your point is well taken.
While you’re certainly right about the Land of Milk and Honey, it definitely appears that the gold is losing its luster. Even Bay-Area residents who grew up there and moved back–at least one of whom I saw earlier in April–seem willing to concede this without provocation. Most of that population growth took place up to 2000, at which point the climb began to flatline, as it is continuing to do. If it weren’t for immigration, California would be losing population. Chances are, if the Bay Area’s growth is what you say it is, it is even more prone to reaching that inflection point.
As the states surrounding California (AZ, ID, NV, OR) continue to grow astronomically, it is clear that an increasing number of people have determined that it simply isn’t worth the cost, and I’d imagine a disproportionate number of these individuals are middle class. Given California’s dependency on immigration, and given the obvious fact that that the majority of the world’s population is poorer than the United States’ median income, it’s safe to wager that most of the newcomers are not well off. The nation’s (and world’s) elite and ultra-wealthy will still find considerable magnetism to the state, but I’d wager the socioeconomic profile of the state is going to continue to shift closer to that of a Latin American nation in the years ahead…one of the many characteristics of California (despite its numerous superlative attributes) that I do not want to see migrate eastward.
States like Mississippi, Alabama, Kentucky, WVa, and the “middle finger of the south” already have that income profile (or are headed there). They didn’t need help from the Coasts to lead the race to the bottom.
Gonna have to disagree vehemently with you on that one. First, the state to which you apply that epithet still has far more in common with its neighbors to the east and north, and while I wouldn’t deny it has some similarities to its neighbor to the south, there is certainly no equivalent to the Delta, Black Belt, or the Coalfield, and there is certainly no McDowell County equivalent. In fact, Indiana may be among the most median states in the country…and the median is merely quite unremarkable, generally involving a high school degree and maybe a year or two of higher ed (but no more than that), and incomes that largely reflect that. California has a disproportionately high percentage of people with doctorates; it also has a disproportionately high number of people with less than an eight grade education. I think I read somewhere recently that only Kentucky has a higher one, and Kentucky’s is no doubt disproportionately concentrated in the east of the state.
That said, even those other states you list still have more of a basis for encouraging a middle class, even if their inverted bell curves skew more toward the left than the right (whereas California still has a robust “bump” on the righthand side, but that bump on the left certainly isn’t shrinking).
I’m not sure how “help from the coasts” has much to do with it, one way or another, just as I’m not sure what these other states have to do with California, since each state generally has considerable control over the sort of taxation and regulatory structures that encourage or discourage population growth. For whatever the QOL the SF Bay offers, it comes at an extraordinarily high price, and one which often forces the people who would pass as wealthy in other parts of the country find they cannot even afford discrete bedrooms in the Bay Area if they have more than one child. All five of the states you have listed don’t have a QOL that aligns much with California, but there’s also less at stake because the COL is so, so much lower. Heck, the COL these days is generally quite a bit lower in the East Coast too. Perhaps most troubling of all is how many well-educated people in California are whistling past the graveyard: they don’t even see great evidence that they might be doing something wrong to have gotten where they are, and the people most impelled to offer sound criticism are the ones leaving. Conversely, the well-educated “thought leaders” (I hate that phrase) in much of the rest of the country seem quite aware of their ills.
“That state” is below median, usually around 40th, in most measures of income. It’s the lowest north of the Ohio River on income per capita and median family income, and trending down for almost 2 decades.
Agreed, it doesn’t have the housing issues…but the amenities, health indicators, and percentage of adults with degrees and advanced degrees are more like the South than the North. There is definitely a two-tier wage market: the educated have decent pay and benefits, and everyone else doesn’t.
I’ll grant that it’s not as bad as the four states I named, but it is trending that way. The state that works mostly works in low-paying jobs and there are more job announcements for below-median than above-median jobs. Hence “race to the bottom”.
So, because I’m just too easily amused, I did a sifting on a reasonably reliable source for median household income by state (Kaiser Family Foundation). It’s amazing how much the state rankings can fluctuate within just a few years. https://www.kff.org/other/state-indicator/median-annual-income/?currentTimeframe=0&sortModel=%7B%22colId%22:%22Median%20Annual%20Household%20Income%22,%22sort%22:%22desc%22%7D
As of 2017 (most recent data year), Indiana is #35 overall. Not the last for the Midwest: Ohio is a bit lower, and Missouri is about $1K lower. Meanwhile, Michigan is barely higher (less than $1K). While I’d agree with you in general that Indiana is not in an enviable position (a recently CityLab article on state brain-drain levels catches onto the problem areas moderately well), I’d wager that Ohio and Michigan have been racing to the bottom even further, sense they have long been both more urbanized and more union dependent than Indiana. Meanwhile, some of the fast growing, flourishing states still have lower medians than Indiana: Florida isn’t too surprising with its extremely heavy immigrant population (and all those fixed-income retirees), but I was very surprised at how low North Carolina was, given the health of its cities and that is is almost certainly a “brain gain” state.
Meanwhile, California is ranked #9. Very respectable, but the bifurcated pay structure is probably what makes it so high, given that about 1 out of 9 residents is not legal and dependent on an informal (and deflated) wage structure. Furthermore, California’s median wages are about 1/3 higher than Indiana’s, but I’m not even going to bother researching to postulate that the Cost of Living is more than one-third higher in CA, even when accounting for the low-wage inland cities like Bakersfield or Stockton or Modesto. The purchasing power for all but the ultra-wealthy (the ones affording those Ritz-Carlton residences) is very weak, and the ultra-wealthy are heavily responsible for pushing a median in CA, A box-and-whisker plot for CA probably stretches to 3X or 4X the length of most states.
The biggest disadvantage to California, however, probably does not align well with Indiana’s biggest advantage, which in turn becomes Indiana’s biggest disadvantage. When the California bubble bursts, where will its exodus find its reprieve? Not Indiana–too far away, and there are at least 15 other states that boast more or less the same cost of living, so that the Indiana difference is without distinction. All Indiana can hope for is to continue to welcome the Illinois diaspora, which is less a bubble than a prolonged stretch of incompetence in civic leadership.
Hit send too fast.
Other places definitely do have the bifurcating pay structure, and offer a small slice of the SF reality. Even in relatively low-cost metros, downtowns and historic SFH districts are outrageously priced compared to outlying areas.
True–I’d say San Francisco’s unaffordability is almost a moot point. As you indicated, downtowns are almost always outrageously priced: even in low-cost Indy, it’s not hard to find housing at >$400 per square feet in the center and historic neighborhoods. At this point, the supply of housing of a certain urban character in a safe neighborhood is far from meeting the demand, and is likely to remain that way until the less-safe neighborhoods start to fulfill this demand.
My bigger concern for SF Bay (and most CA cities) is the fact that the unaffordability extends 10-15 miles out, in suburban areas like Mountain View. Yes, I’ll concede that Mountain View is Google-town and generally desirable, but its school district is merely good (not Cupertino/Palo Alto good) and the prices for townhomes have increases 200% in the last decade. Teachers and law enforcement cannot command enough salaries to afford to live anywhere near where they work, and successful upper-middle income households are still raising their kids in 2BR units. These are not deal-breakers–clearly some people are still willing to pay this price–but what about when home values grow another 100% in the next 5 years? How much longer can Google convince talented tech-nerds to move to the SF bay, if they can do all their work remotely from Boise and have a great home/yard so their 3 kids don’t have to share a bedroom? Google could pay Joe the Tech Nerd 40% less, keep in him in Boise, Joe is still making a great salary (by Idaho standards) and Google has a great worker that costs them less. Win-win. Rinse and repeat.
The low-cost states are the gasket for the pressure building in California. It’s a steady trickle right now, but that pressure jar just might explode. Not likely to benefit states like Indiana or Ohio or Kentucky all that much, but it isn’t going to hurt them per say either. Indiana is already a release valve for the incompetent fiscal management and outrageous taxation in Illinois, and Chicago isn’t even a particularly high-cost region (given its size and global influence).
It may not be a case of whistling past the graveyard. Should everyone who “wants” or wanted to live in California be encouraged to live in a seismically deadly, overcrowded place that suffers from frequent droughts? At what cost to the landscape and environment would eternal subsidized sprawl (the reality of the American dream) cause? Maybe we have not solved the problems because not every problem can be solved in the context of the American lifestyle paradigm: every family in a large single family house who drives single occupancy vehicles everywhere?
I think of my hometown in, yes Indiana (For Wayne). It does the American Dream very well, but the sprawl now extends for forty miles in a basically stagnant metropolitan area. (No Youngstown collapse, but not booming either, really). They don’t have blocks of boarded up houses, but that is because the City knocks them down quite quickly….urban prairie may be better than East Cleveland devastation, but it is not a healthy neighborhood. And the recent homicide rate…was TWICE that of notorious Stockton, CA.
But…because of these policies and the realities of the real estate market, you can buy a “nice” house for $120,000. And an older house in a classic 1920s neighborhood for even less!
Fort Wayne probably is a bit more on the stagnant side than it would like to be, but I have to hand it to them: it does a mighty fine job of covering it up. Without digging into the history, I’d wager that Fort Wayne’s remarkable 23% population growth from 2000 to 2010 was heavily attributable to annexation. But a lot of southern cities engage in persistent annexation to shroud prevailing economic stagnance, which is confirmed when the surrounding counties have minimal growth or are even declining.
This isn’t the case with Allen County: it’s growing too. 7.1% from 2000 to 2010 is no great shakes, but it’s better than many peer Midwestern cities, including those with a generally solid profile. Grand Rapids, for example, has a great PR that often leads people to think it’s a flourishing metro, and it does have a pretty great little downtown, but the overall growth of the region is pretty much on par with Fort Wayne. My suspicion is that Fort Wayne, like so much of Indiana, has had a long string of capable but hardly visionary leadership.
And, like so many Midwestern states, much of the growth of the cities has come from rural in-state dwellers who get a college education and move to the big cities. Columbus OH has been a growth leader for the Midwest in the 2010s, much the way Indianapolis was in the 2000s, but in both cases, the cities depend disproportionately on internal migration: rural kids who go to school in state and settle in the big city. I don’t mean for this to sound patronizing, and it’s help buffet those two cities…but it has also done little to boost the overall socioeconomic profile of the states (as evidenced in the conversations Chris B and I have had on this thread). And compare Indy/Columbus to a city like Nashville, where a disproportionate amount of the population growth is from out-of-state, and it’s easy to form conclusions about which cities are most likely to rise to a higher tier in their global city ratings, and there aren’t too many in the Midwest.
SF, meanwhile, is unlikely to get unseated. California has two alpha cities (and San Diego may be beta plus, but is probably aspiring to alpha minus), but the bifurcation I see is reflected in the achilles heel of the great global cities: their persistent childlessness. Sure, they get tons of college grads from places like Indy and Columbus, but they offer a culture for people who prefer their work/family balance to be heavily skewed to the former. There is no balance. And in San Francisco, there are hardly any kids. If people can do the techie or entertainment industry work of SF or LA remotely, enjoy amenities in the steadily improving downtown of (fill-in-the-blank; they’re all improving!), and still afford to raise their kids with a nice home and a decent school system, how many people are still going to justify CA’s housing costs? If the bulk of Generation Y decides to go the alpha city route, San Francisco may be just fine…but the demography of the United States could turn to something more akin to Germany or Japan, but without the homogeneity that allows them to deliver their social services so much more effectively.
I agree 100%. Rationally speaking, a place like Fort Wayne makes a lot of sense. This betrays my yuppie checklist, but Fort Wayne now has amazing coffee (Fortezza) downtown, a home-brewed chocolate company (DeBrands) with a downtown “tasting room/café), an old somewhat ugly 1960s bank highrise converted into very chic condos, offices, and a booming tap room.
But then….I remember….FEBRUARY. And, after last year’s baptism by fire it is less true perhaps, but I am sorry, the vast fields of GMO corn and soybeans are just not very appealing to me. My…obsession….is recreational road cycling, and the upper Midwest just does not “have it”. Even I were eager to give up 2/3 of the year to winter and summer rainy days, I am old and I don’t want to give the months and months up.
No kids, so I can acknowledge what you are saying. Americans consume far, far too much, so population growth should be something we should be severely reigning in. So childless yuppiedom has its good points over the long period. Plus, growing up, I was a “faggy” nerdy little bookworm. I frankly hated my childhood and adolescence in Fort Wayne, where I attended a high school full of the self-important children of the haute bourgeoisie (we were somewhat poor). Not that many fond memories, iow. 🙂
Doesn’t contradict your main talking points, of course. I just don’t think there are easy solutions. Not every problem can be solved (see: global warming. The Mad max world, is, bluntly, investable). There are seven billion people. a billion + of whom aspire to “western” lifestyles.
Still….damn is it cheap.