Not a week goes by when I don’t hear of another potential development being entitled in the hottest Oakland neighborhoods, particularly Temescal, West Oakland and Uptown.

I’m also asked, with the same frequency, when we’ll start seeing some of that inventory arrive on the market for sale.

Odd as it may seem with our rapidly rising rents and sales prices, the answer may be “not anytime soon”; especially for the highrises.  Given our constructions costs in the Bay Area, it simply doesn’t make sense to break ground on a taller building unless you are certain you can exit over $700/sf.  As our sale prices are currently tapering off at well below that, our future may be in the lo-rise type of construction already prevalent in Emeryville and West Oakland, no matter what the most ardent density advocates would argue.

Unless, of course, labor and material costs come way down, and/or new modular construction techniques really do prove to be viable options.

“Paul Zeger, partner at Polaris Pacific, said stick-built townhomes need to garner $500 a square foot, mid-rise buildings need about $650 and highrises need about $700 a square foot in order to justify building.”

via Why no one is building condos in Oakland and why there’s hope – San Francisco Business Times.