Construction at the luxury condominium 88 at the Park has been slowed due to delays in receiving materials. ( Courtesy First City Development)

Construction at the luxury condominium 88 at the Park has been slowed due to delays in receiving materials. ( Courtesy First City Development)

Supply chain disruptions delay badly needed San Francisco housing

Virtually every construction project in the Bay Area is being affected in some way

The global supply chain crunch is being felt at the foot of Potrero Hill, where the opening of a condo building known as 88 at the Park has been delayed by six months. The culprit? Not lumber or steel, but mirror lights, quartz countertops and channel glass.

Calvin Li of First City Development, the firm that’s leading the project, says his company thought about opening the building without these finishes but ultimately decided against it. “We don’t want to compromise the quality or the first impression for the buyers.”

Virtually every construction project in San Francisco is being affected in some way by the current state of the global supply chain, developers, contractors, and architects say. Some, like 88 at the Park, are seeing delays. Other projects are receiving minor redesigns midway through construction, while those that haven’t broken ground yet are going through far more extensive pre-planning than they would have before the pandemic. While there’s some sense the most acute shortages might be easing, there are other indications the current crunch could be the beginning of a new normal for the construction industry, making it all the more difficult to build badly needed housing in the Bay Area.

At this point, the issue isn’t so much a shortage of any particular material, as a general sense of unpredictability in the supply chain. “The worst part is the uncertainty,” says Sam Moss, CEO of the nonprofit affordable housing developer Mission Housing. “Quite literally anything can be delayed. There has not been a rhyme or reason to it.”

The convoluted journey of the missing materials at 88 at the Park illustrates that uncertainty. The building’s countertops were manufactured in Vietnam, and loaded onto a ship on schedule. The delays came from the ship waiting at port here in the United States, and the shipment languishing on the dock to be unloaded. The building’s LED mirror lights, manufactured in Ohio, had to wait on electrical parts from Asia. Once the lights were complete, a shortage of truck drivers delayed them even further.

In response to a request from The Examiner, the San Francisco-based firm David Baker Architects polled its staff and identified over a dozen materials that contractors have had trouble procuring, affecting nearly every part of the construction process. Steel and wood have at times been hard to come by, along with multiple forms of insulation, certain types of windows and doors, as well as paint and acrylic panels for exterior finishes.

DBA has been adjusting some of its designs in response, shrinking building frames and stairway footprints, and substituting certain plastic elements for metal ones.

For Moss and Mission Housing, the supply chain crunch has forced the nonprofit “to expend a lot more pre-development money before the building breaks ground.” Over the long term, that could be a good thing, Moss says. By working more closely on the details with architects, contractors and community members from the beginning of a project, the developer should be able to inject more certainty into the construction process.

Joe Olla, vice president of Nibbi Brothers General Contractors, says his company also has changed its practices in recent months, adding a warehouse to stockpile high-demand appliances and materials, like refrigerators, stoves and windows. “Gone are the days when you could basically do just-in-time delivery,” Olla says. “You have a day where it’s going to get delivered, it shows up, you move it up to whatever unit or floor you need to — you can’t really rely on that anymore. The delivery times are too challenging.”

Supply chain issues also add an extra variable to the already difficult process of “occupied rehab,” or renovating a unit that currently houses a tenant. “If their unit’s torn up and waiting for cabinets or whatever, that doesn’t make for a happy client or a happy tenant,” Olla says.

Material delays have forced a handful of Mission Housing residents to stay in a hotel or other accommodation — provided by the landlord — for weeks longer than planned in some cases. “There’s a human cost to it,” Moss says. “Thinking you’re going to go back to your brand new home, and then being told you need to wait another two or three weeks, is emotionally brutal.”

Of course, the global supply chain is not the only factor posing a challenge to San Francisco construction projects. For the development team at 88 Arkansas, pushing sales back a few months ultimately made sense from an economic perspective. With condo prices still climbing back from pandemic-era lows, the project’s creditors were “OK with pushing the sales back later,” Li says, “because we can see the market right now is picking up.”

Natural disasters here in North America seem to be a factor, as well. Successive hurricanes battering the Carolinas have made it “very difficult to get boxed cabinets right now,” Olla says. This year’s Winter Storm Uri, which caused a deep freeze across Texas and much of the South, has made it harder to procure plastic pipes and foam used in insulation. While the nationwide truck driver shortage may have been sparked by the pandemic, it doesn’t look like it’s going anywhere soon, as more people find ways to “make a living without making a living,” in Olla’s words.

Fortunately for pros in this business, adapting to changing circumstances is nothing new. “One of my mentors always used to say that we measure things with a laser, but then we execute with a bludgeon,” Moss says. “It sucks and it’s brutal, but the supply chain is just the next obstacle that the affordable housing industry is being called upon to jump over.”

bschneider@sfexaminer.com

affordable housingconstructionHousing and Homelessness

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