A developer is hoping increased San Francisco housing demand, fueled by hiring at artificial intelligence firms, and fast-rising rents will help advance plans for a long-stalled residential tower that could bring hundreds of apartments to the heart of the city.
The city Planning Department has green-lighted a revised proposal from Miami-based Crescent Heights to build a 67-story, mixed-use tower in place of a shuttered car dealership at 10 S. Van Ness Ave. The proposed skyscraper calls for roughly 1,000 units, including rentals and for-sale condos, at the edge of the city’s Mid-Market neighborhood.
If it breaks ground, it will be the largest project of its kind underway in San Francisco. Eight apartment complexes of at least 200 units are under construction in the city, with the largest a 543-unit project in South San Francisco.
Crescent Heights said in project documents that the development "will provide new sustainable and affordable homes to support varied-income residents" and will "create a substantial number of new jobs during and after construction."
San Francisco — like other major cities in California — is under state requirements to boost housing inventory to increase affordability.
Rents in the city grew faster than in any other major U.S. metropolitan area in the latter part of 2025. As of December, rents were up 5.4% year over year. The average monthly rent in San Francisco now stands at $3,310, almost 89% above the national average of $1,755.
Still, San Francisco is behind on meeting its goal to build 82,000 homes by 2031. In an effort to spur housing development, officials have peeled back development requirements — from permitting and fees to the amount of affordable housing market-rate projects must provide.
"Rents will need to increase further to make new construction financially viable,” said CoStar Senior Director of Market Analytics Nigel Hughes. San Francisco rents remained flat from 2020 to 2024, while building costs and just about everything else went up by 20% or more. “So, relatively speaking, rents are low,” he said.
Development hurdles
Under the revised plans recently approved, the 10 S. Van Ness tower would contain 1.6 million square feet in 1,019 market-rate units of housing plus ground-floor shops and parking at the edge of the city’s Mid-Market neighborhood. The plans include 363 rental apartments — 89 of them affordable — and 656 for-sale condominiums. Crescent Heights aims to begin construction on the project by 2027, reports indicate.
The 820-foot structure would become the third-tallest building in the city after Salesforce Tower and the Transamerica Pyramid — that is, if a proposed 1,225-foot office tower at 77 Beale St. in the heart of the city doesn’t get built first.
A prior iteration of the Van Ness project called for a 55-story, 610-foot building the city initially approved in the summer of 2020.
Last year — with the project stalled amid the city’s post-COVID-19 real estate reality — Crescent Heights went back to the drawing board and applied for permission to build a taller, larger building to make the project viable by taking advantage of new state and city measures that aim to provide developers with incentives to build dense, public-transit-friendly housing.
Crescent Heights is making use of California’s Assembly Bill 1287, a state law that took effect in January 2024 and grants developers an extra “stacked density bonus” for planning additional units priced for below-market renters. The project also benefits from Senate Bill 423, which fast-tracks approval for projects near transit that contain affordable housing, as well as California’s density bonus law.
A combination of rising costs, high interest rates and declining rents has stalled virtually all market-rate construction across the Bay Area in the last few years. Among San Francisco’s approved residential developments languishing due to lack of financing and other larger economic factors are a 48-story tower at 524 Howard St. with 350 units; a 72-story skyscraper at 530 Howard St. with 672 units; and a 47-story tower at 30 Van Ness Ave.
The Van Ness project began construction in 2022 but was put on hold the following year after the developer, Lendlease, realized that San Francisco’s post-pandemic economy wasn’t bouncing as quickly as it had hoped.
New AI hope
Developers’ attempts to revive big residential projects like One Oak and 10 S. Van Ness reflect hopes that rising rents boosted by AI startups bringing workers back to the city can finally make such big housing projects viable.
“It is a sign that developers are aware of the growth in demand for apartments and have confidence to move forward,” Hughes said. “The fact that very few have broken ground yet is a testament to the high cost of construction and the difficulty of getting financing."
Hughes noted that AI-driven firms are expanding aggressively, fueling job growth and reversing a population exodus that hit San Francisco with the COVID-19 shutdown in 2020. Now apartment vacancy has tightened to 4.5%, its lowest level in a decade, and with only 2,300 units under construction, supply constraints are expected to keep upward pressure on rents into 2026.
The 10 S. Van Ness and 30 Van Ness projects were approved as part of a well-trafficked area formerly dubbed "The Hub" where two major arteries, Van Ness Avenue and Market Street, meet. City officials envisioned it as a high-density “vertical neighborhood” that could function as a gateway between SoMa, the Mission District and the Civic Center, clustering the city’s tallest residential skyscrapers around major transit lines to maximize sustainable housing growth.
Crescent Heights has been working for over a decade to develop the 10 Van Ness site, with the first planning application submitted to the city in mid-2015.
As part of its affordable housing obligation, the developer bought a property next to BART’s 16th Street Station in the Mission and donated the land to the city for affordable housing. The agreement allowed Crescent Heights to develop a fully market-rate skyscraper at 10 S. Van Ness Ave.