As the office market in San Francisco boomed and real estate was the best investment, developers fought for new building permits. However, when the economy crashed, resulting in nearly 14 million sf of vacant space, approved developments either delayed construction or scrapped the groundbreakings indefinitely.
Now the city is experiencing an all-time low in the commercial real estate market, with a 21 percent vacancy rate and rental rates that have fallen from $80 per sf to less than $30 per sf.
Now, the city has decided that if the developers are not going to use the land, the permits should be revoked. Under the city's planning code, if developers fail to start building or complete a project within 18 months of approval, the permits can be taken away.
Some of the projects that have failed to comply with the planning code are the 160,000-sf Bryant Square office project at Bryant and 20th Streets, and the third building of Foundry Square's four-building development, located at First and Howard Streets.
Wilson Equity Offices, the developer of the Foundry Square office complex, had signed Sun Microsystems as the main tenant for the building but the company has cancelled its lease.
Both projects were approved in 2000 but are considered a risky investment today.
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