No new highrises on the horizon for 5 years?

San Francisco's latest Catch-22: falling land prices may lead to some great deals, but little availability of capital markets means there's no money to invest:

Plummeting land values and the deep recession have taken a toll on one of San Francisco’s central business models for urban redevelopment: public-private development deals.

With many developers predicting that highrise development of any sort won’t work economically for another five years, public agencies are struggling with a development model in which private builders pay for the right to develop valuable land and, in the process, bankroll public benefits like parks, roads and affordable housing.

Until the capital markets are willing to invest in the next generation of highrise condos, hotels or office buildings, public entities like the Port of San Francisco and the city Redevelopment Agency are stuck with prime land that has little or no current value.

The plus side, if you can call it one, is that supply will be limited in the next few years, eventually leading to higher prices if demand picks up.

SOURCE: BIZ JOURNAL