In 1986, San Francisco voters passed Proposition M, which allows only 875,000 square feet of large office space to be added to the city total each year. (An additional 75,000 square feet is reserved for smaller office projects.) Each Oct. 17 begins the approval period, and the San Francisco Planning Department expects to hit its limit in October 2015. If that happens, notes San Francisco Business Journal’s Corey Weinberg, the city will have to come up with some way to determine who gets to build: “The other two times that the city has brushed up against the office space cap – in the late 1980s and the early 2000s – city planners made developers compete for space in so-called ‘beauty contests.'”
But developers competing for space doesn’t mean that tenants win. Anything that drives up the costs and constrains the supply results in higher rents.