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onstruction costs in San Francisco are still rising, but at a slower pace than the national average. According to Rider Levett Bucknall's latest research, the U.S. quarterly national average increase is approximately 1.07 percent, while San Francisco's average construction cost increases fell behind at just 0.71 percent in the third quarter and 4.06 percent year-over-year. This trend is likely similar throughout the Bay Area, as companies share a common pool of contractors, subcontractors, and suppliers.

    The number of cranes in San Francisco has decreased significantly since 2020, with only six currently active compared to 33 at the start of that year. However, new projects are underway, such as residential developments within the Transbay Block 2 and Potrero Power Station areas. Associate Principal James Casey notes that while a slowdown in construction costs may encourage private developers, other factors like high land costs and lengthy entitlement processes may have a greater impact on development decisions.

    Despite slowing increases, Bay Area construction costs remain among the highest in the country, with prime office space ranging from $440 to $750 per square foot. Developers are cautiously optimistic about the current market, with some noting that subcontractors are now more available due to decreased project activity, leading to faster construction times and higher-quality work. However, this window of labor availability is expected to close quickly, making it essential for developers to move forward with projects promptly.