San Francisco remains one of the most expensive U.S. cities for construction, with commercial building costs frequently exceeding $500 per square foot—second only to New York City—reflecting high material, labor, and regulatory expenses. Long‑term cost escalation has moderated slightly, with year‑over‑year increases around 4% in late 2024, below the national average of nearly 5%—though still significant for project budgeting.
Typical cost ranges vary by project type, including office, retail, hospitality, medical, multifamily, and life‑science facilities. These ranges are intended to guide early-stage planning and feasibility analysis, with detailed cost tables available in linked project-specific spokes.
Skilled trade labor remains a critical cost driver. Union wages for electricians, carpenters, HVAC technicians, and other trades are elevated, and shortages of qualified workers continue to pressure labor rates. Premium pay, overtime, and training requirements for safety and seismic compliance further contribute to upward pressure on labor budgets.
Equipment rental—ranging from cranes and earth‑moving machinery to scaffolding and formwork—represents a substantial portion of project overhead. Daily, weekly, and monthly hire rates are influenced by availability, demand, and logistical constraints. Contractors are advised to engage equipment providers early and explore bundled or long‑term rental agreements to manage cost volatility.
Permitting and inspection fees in San Francisco can add meaningful cost and schedule risk. For example, street improvement fees and inspection surcharges are assessed based on project scope and estimated value, and may include additional percentages tied to estimated construction costs. Delays in approvals and complex review processes can further inflate budgets.
Site access challenges—such as narrow streets, traffic restrictions, and staging limitations—can increase labor and equipment mobilization costs. Material delivery is also affected by supply chain disruptions, tariffs, and lead times, particularly for steel, lumber, copper, and specialty MEP components.
San Francisco’s development landscape in 2025 reflects a cautious recovery. Private construction growth remains subdued amid high interest rates and economic uncertainty, while public-sector projects—such as airport infrastructure and healthcare facilities—continue to expand. Supply chain volatility, especially for electrical and structural materials, persists, and sustainability mandates and seismic codes add complexity and cost to nearly every project.
Despite these challenges, office leasing activity has rebounded, driven by demand from AI and tech firms, tightening vacancy rates and signaling renewed interest in commercial development. Meanwhile, housing projects dominate the pipeline, though many remain stalled in permitting or financing stages, underscoring the importance of cost control and early engagement in project planning.
