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San Francisco, home to many of the world’s leading tech giants will soon be home to a new crop of hotels. More than 4,000 rooms will be added to the city over the course of the year in several of the city’s various districts. The new development outpaces the 5+ year battle between residential and commercial developers vying for real estate in the the Golden Gate city.

The rise in hotel construction is a hard blow to commercial and residential builders and developers who have been fighting for land over the last five years. But the city of San Francisco has seen a significant demand for hotel space over the last year. According to Bloomberg, in 2015, more than 24.6 million people visited the city–causing the price per hotel room to jump nearly 88%.

Not only is the hotel industry outrunning other developments, in several cases, their proposals have scrapped existing plans for housing.

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More Problems for the City’s Residents

While the booming tourism may be good for the city, the priority on hotels–not housing–continues to spell out trouble for the city’s residents. San Francisco is already noted as one of the most expensive cities in America where rents and home prices continue to rise.

Tim Colen, executive director of SF’s Housing Action Coalition relates the struggle in an article published by SF Chronicle: “It’s not surprising that as housing becomes more difficult to build or less financially attractive, we’re seeing developers turning to hotels.”

Coupled with the recent legislation that requires the city–and potential developers to increase its below-market housing options from from 12 to 25 percent. This means that fewer developers will be able to build the coveted luxury apartments that they dream of building and renting at a high price. The legislation is aimed to support the city’s current residents who continue to be pushed out of a city that no longer is capable of housing low and middle-class families.

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New Hotels Planned

Hotels that have recently been completed or are in the finishing stages include the former Renoir Hotel on Central Market Street, Hotel Via on 144th King Street, and two hotels developed by The Pacific Eagle Holdings Corp that will target the younger, millennial crowd on Market St.

2016 may be a great year for hotel developers but will spell trouble for the rest of the industry and for many of the city’s residents. One can only hope that as the city expands, it also finds better ways to mitigate its existing challenges.

 

San Francisco Bay Area