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"The
Millennium Tower, a closely watched skyscraper at First and Mission streets,
didn't reach the market until more than a year after its South of Market
neighbors. The team at the 419-unit building isn't closing sales
yet, but since November more than 80 condos have gone into contract, a rate
of about nine per month. Activity during the past four weeks has been
particularly strong, said Richard Baumert, managing director with Millennium
Partners." This project was a joint venture of SHKP
with Millenium. Kwok Sr. purchased the lands decades
ago. - 2008
August 8
S.F. condos looking solid in
'dog-eat-dog' year
If 2007 was the year of the crane and the
sales center, 2008 will bring punch lists and reality checks.
More than 2,500 new condominiums across
the city will be move-in ready this year. On Rincon Hill some 700 new
homeowners will take occupancy in Tishman Speyer's Infinity and Michael
Kriozere's One Rincon Hill. In Mission Bay, Intracorp's green Arterra will
take root, and the first phase of Nat Bosa's Radiance should open. On the
other side of Market Street will be the Hayes, Symphony Towers and the
Argenta.
Since most of these projects opened sales
offices a year to 18 months ago, at the peak of the condo boom, industry
observers will be watching closely for defectors. What percentage of buyers
will walk away from the 3 percent deposit put down when the unit went into
contract? With the days of 5 percent down payments gone, how many
entry-level buyers will be unable or unwilling to cough up the 20 percent
equity needed to close deals? And with the housing market depressed in many
parts of the country, some San Francisco condo buyers may be counting on
handsome returns from the sale of a current property -- profits that now may
be unrealistic.
One project that observers will be
watching more closely than the rest is One Rincon Hill. With a its signature
"One Gincon cocktails" served at a series of parties, and buyers
lined up until 2 a.m. to reserve units, the frenzy around One Rincon
represented perhaps the peak of the condo boom. But because the project was
perceived as a bargain, priced slightly below what was seen as market rate,
the project may have drawn a higher percentage of investors than other
developments. Some 90 percent of the units are in contract.
Gregg Lynn, a broker at Sotheby's, said
all six of the buyers he represents at One Rincon are preparing to close,
but some buyers will walk away.
"It won't be 90 percent closing --
the credit environments have changed so much," he said. "It's
going to be a stretch for some people, which will free up some
inventory."
Alan Mark, one of the city's leading new
homes sales and marketing firms, said most San Francisco buyers put down at
least 10 percent. When the credit crunch hit last summer, Mark looked at all
the units under contract in buildings he is selling, including the Hayes,
the Arterra, and the Infinity.
"We didn't have a lot of 5
percenters," said Mark.
Developer Joe Cassidy, who built the
Palms and has started construction on a 113-unit project at 1844 Market St.
in the Castro district, expects the condo market to drag into 2009. He
characterized the suburban markets as a "blood bath," with
highrise and midrise projects in San Francisco somewhat insulated from the
national meltdown.
"It's going to be dog-eat-dog for a
year," he said.
With roughly an 18-month construction
schedule for most mid-sized projects, June will be a good time to break
ground on new condos in the city, Cassidy said.
"It's got to be good quality and a
good location with good financing and good marketing," he said, adding:
"There is no confidence right now."
Cassidy said he sees prices dropping
another 1 percent to 2 percent, with a total decrease of 6 percent to 7
percent from the peak seen a year ago. Cassidy said the slight downturn
won't be enough to prompt fire sales, but is a good reminder that real
estate is a cyclical business and there is risk in housing development as
well as reward.
"It's a dangerous game to be a
builder and a developer," he said.
New sales offices opening up in 2008 will
include the 113-unit Blu at 631 Folsom St., the 179-unit Argenta at 1 Polk
St., the 319-unit Radiance West in Mission Bay. In addition, the marketing
for phase two of One Rincon and the Infinity will start up. And Millennium
Tower on Mission Street, the city's most high-end project with
$2,150-per-square-foot penthouses, opened its sales office Nov. 8 and will
be the most coveted deluxe offering of 2008.
Mark of the Mark Co. said he sees
continued softness in the condo-rich South of Market enclave, but modest
increases in other areas. While the city has a dozen projects for sales,
many of them are 40 percent to 60 percent sold out.
"There are a lot of projects, but
not a lot of units," said Mark. "If absorption stays as it has
been, by June most of these projects should have closed. There won't be a
lot of sales offices to go to, and the ones that are open will be skewed
toward the higher end."
Lynn of Sotheby's said demand for
single-family homes in family-friendly neighborhoods like Noe Valley will
continue to be high.
"I have a dozen families like that,
just waiting for the right houses," he said. "There isn't much
inventory and there hasn't been."
Things that mattered in 2007:
- Crunched: The credit crunch and real
estate downturn has slowed down construction schedules as several
anticipated projects have not broken ground, including Crescent Heights
condos at 10th and Market streets, and Turnberry's Rincon Hill project.
Also, Fifield is selling its entitled Rincon Hill development, and
developer Don Peebles scrapped a plan to develop 250 Brannan St.,
selling it as an office building instead.
- Grand slam: The SoMa Grand: TMG
Partners and AGI Capital Partners took a huge gamble with the 246-unit
SoMa Grand. Sixth Street is still dicey and the front of the new federal
building next door can look like a homeless encampment on weekends. Even
so, this exciting project is attracting investors and restaurateurs to
the transitional area.
- ParkMerced goes green: The owners of
the 3,200-unit Parkmerced unveiled a 15- to 20-year plan to build
another 5,700 units and create a Muni-centered transit community with
ample green space and grocery stores.
- Rentals rule: Apartments are back.
AvalonBay and Urban Housing Group broke ground on another apartment
complex in Mission Bay as rentals become more attractive than condos for
some investors.
- Trinity Plaza: At long last, Angelo
Sangiacomo broke ground on his legacy project: the 1,900-unit Trinity
Plaza. The first phase will include about 400 units and will house all
current residents. -
2008 January 4 BUSINESS
TIMES
Ritzy Chronicle Building Units Fetch
$1,350 Per SF
The new Ritz-Carlton Club and Residences,
a combination of full- and fractional-ownership residential development
borne out of the historic Chronicle newspaper building at the corner of
Market and Kearny streets, opened its doors. At a cost of $90
million, the 115-year-old office building--considered the first skyscraper
west of the Mississippi--has been increased in height from 16 to 24 stories
and transformed into a 101-unit condominium tower.
While the 12th floor resident’s lounge
is up and running in addition to the lobby, the fitness center and board
room are not targeted to open until sometime in 2008. A source
with Ritz-Carlton tells GlobeSt.com that 90% of the 57 full-ownership units
have been sold at an average price of $1,350 per sf or about $1.5 million
per unit, generating over $100-million in sales.
Specific sales data on the remaining 44
units being sold as fractional housing was not provided. Each of those units
can be sold 12 times over for a total of 528 sales, and the source intimated
there is a significant amount of selling left to do as only a portion of the
fractional units have been released for sale. The asking price for a 1/12th
(21-day) interest in a fully furnished one-bedroom unit starts at $232,000,
which means such a unit could generate nearly $2.8 million in sales revenue.
The project was a joint venture of the
building’s owner, developer Jim Hunter, and the Ritz-Carlton Development
Co. LLC (an affiliate of the Ritz-Carlton Hotel Co. LLC).
Under his Alameda, CA-based Hunter Group,
he began seeking approval of the project back in 2004, when vacancy in the
city’s office market was around 16 million sf, or about 22%.
The exterior transformation of the
building including removal of the metal cladding that had been added to the
masonry and stone building in the 1960s and adding eight stories to the
structure. Originally designed by Chicago architects Burnham & Root and
then rebuilt by San Francisco architect Willis Polk after suffering major
damage in the 1906 earthquake, the latest renovation and expansion of the
building was designed by a local architecture firm led by Charles F.
Bloszies. 2007 November
19 GLOBE
ST.
Millenium
sky's the limit
Millennium is poised to test uncharted
territory in the city's rarefied condo market. At the top of the
647-foot-tall building, a quartet of penthouses on the 59th and 60th floors
of the blue-gray glass tower, prices will hover around $2,150 a square foot.
With sizes ranging from 5,500 to 5,800 square feet, not including spacious
outdoor terraces, that puts each penthouse around $12 million. On floors 49
through 58, the condos will range from $3.3 million to $6 million, an
average of $1,670 a square foot. From 26 to 48, pricing goes from $2 million
to $3.25 million, or $1,375 a square foot.
Even the bottom 25 floors, at $1,100 a
square foot, are richer than One Rincon Hill, which averaged $1,025.
That bullish pricing, amid a weakening
national and Bay Area housing markets, reflects demand at three previous
ultra-deluxe projects: Millennium's Four Season Residences, the St. Regis
Residences, and the Ritz-Carlton Club and Residences, according to
Millennium Partners Managing Director Richard Baumert, who is overseeing the
project.
Resale values at those earlier projects
back up the aggressive pricing. Two resale units at the Four
Seasons are in escrow at over $5 million and one unit just closed at $6.6
million. All three condos sold between $1 million and $1.5 million over
their original price tag. "We know what the demand is at the Four
Seasons, not just for the penthouses but that style of living. Now we have
the historical data to support how people do love this kind of
lifestyle."
In Millennium's 13-building portfolio --
which includes towers in Boston, Los Angeles, Miami, Washington D.C., and
five in New York -- only 50 Central Park South in Manhattan has higher
prices than the Mission Street project, said Baumert.
"There has been a tremendous amount
of interest in the penthouse space, but we have not yet entered into formal
conversations," said Baumert.
He said the majority of buyers inquiring
into the penthouses would buy two and combine them. And the $12 million-plus
price tag -- $25 million if you're grabbing two -- doesn't include interior
finishes, as the units will be delivered in shell condition with buyers
likely investing millions more to build them out.
"At that price range people expect a
level of customization higher than other parts of the building," said
Baumert.
But comparable sales at past super-luxe
products may not apply to the Millennium, according to Pacific Market
President Paul Zeger, who markets and sells One Rincon Hill. The sheer
number of for-sale units in the Millennium -- 419 versus 142 in Four Seasons
and the 102 in the St. Regis -- will test the level of demand well above the
$3 million mark.
"They are applying a New York model
to San Francisco and the challenge is they have an awful lot of
product," said Zeger. "How deep is the market for people who want
to pay between $2 million and $6 million for that kind of product? The
answer is: we don't know yet."
Zeger said the units on the bottom half
of the Millennium will in fact compete with the cheaper Infinity and One
Rincon, both of which are largely sold out.
"The question is, do you want to be
at the top of the One Rincon or the bottom of theMillennium?
While Zeger thinks the lower floors will
be a hard sell, the Millennium name shoulddraw some buyers.
"There is a huge international
market that knows Millennium from New York, Boston, and Florida and can
afford those prices," he said.
Millennium advocates says that with a
residents-only L.A. Sports club and an amenities floor more lavish than any
of the city's hotels, the tower will offer everything that the best hotels
have. But rather than sharing the facilities and 24-hour concierge services
with out-of-town hotel guests, Millennium owners alone will have access to
them.
In addition, the view on the top half of
the building will be much better than the shorter St. Regis and Four
Seasons. "You take the Four Seasons and add 20 floors and it
would be comparable."
The Millennium is not taking any chances
when it comes to sales staff, Baumert said. In addition to Nelson,
Millennium tapped Bryant Kowalcyck, who headed up the sales efforts at the
St. Regis Residences, and Jennifer Xu IIes, a top producer at the Mark
Co.,which is selling the Infinity.
David Barrett, who sells high-end
properties for Warwick Properties and currently has seven listings near or
above $10 million, said the Millennium penthouses "could verywell
command those prices."
"It's very aggressive but there is a
pent-up demand for large penthouses in San Francisco," he said.
He sees the downtown towers, especially
the Millennium, as attracting retiring baby boomers as well as young tech
entrepreneurs from Silicon Valley and the city.
"There is a whole new generation in
San Francisco that wants to stake their claim using
their own fortunes," he said.
"New areas are being claimed by new groups."
- 2007 November 2 BIZ
TIMES
San Francisco's tallest
residential building
After four years, group to start work on 58-story project
Rendering courtesy Gary Edward Handel + Associates
ESSENTIALS
Millennium Tower at 301 Mission is one of the bay
area’s most exciting residential projects with a desirable location in the
heart of San Francisco’s financial district. Residents are
only steps away from The
Embarcadero, Yerba Buena Gardens, Pacific Bell Park, China Town, South
Beach, SOMA and Union Square.
The 600 foot luxury residential tower’s features include upscale amenities
and services that are traditionally found in Millennium Partners’ renowned
mixed-use developments found nationwide. At 58 stories, the residences
provide spectacular panoramic views of the city, and the development will
soon be recognized as a landmark on the San Francisco’s skyline.
Residents can enjoy the privilege of ownership at Millennium Tower at 301
Mission in 2008.
HIGHLIGHTS
- Soaring 58 stories high with
extraordinary views
- Luxury condominiums with
exquisite appointments. Residences range from: 1 to 3 Bedrooms, and
Penthouses
- Unique features include:
Enclosed pool & spa area, Resident owners’ lounge, Kids’ area
with changing rooms, and Fitness facilities
- Notable features also include
spectacular views and parking
NEWS CLIPPINGS:
2005 - Construction
of San Francisco's tallest residential building is set to begin in
September.
Towering above neighboring developments
and redefining the city's skyline, the Millennium Tower at 301 Mission St.
will pack 420 condos into a building extending 645 feet in the sky -- an
engineering feat that also makes the building the city's fourth highest.
Demolition of vacant buildings and other
site work begins Aug. 1.
New York-based Millennium Partners, which
also created the nearby Four Seasons Hotel and Residences and the Metreon,
is developing the $400 million project. It was designed by Handel Architects
of New York and is being built by Webcor Builders of San Mateo. Financing
was arranged and led by HSBC Group and Bank of America.
"It's a structural science project
once you get up that high," said Sean Jeffries, a principal with
Millennium Partners. "We've been working on this for four years and
can't wait to get it officially commenced."
Demolition at the one-acre parcel bounded
by Fremont and Beale streets begins Aug. 1, with Webcor crews clearing three
vacant buildings from the site. Official groundbreaking is slated for
September with construction expected to finish in late 2008 or 2009.
Shuttering earlier plans to include hotel
and office space, the development will be all condos -- one-, two- and
three-bedroom units ranging from 700 square feet to 6,000 square feet.
Millennium Partners is still determining
the pricing as well as the availability of the units. Although Millennium
intends to sell the units, principals are reserving the right to also rent
some, depending on market conditions.
Indeed, the Bay Area's overheated housing
market could cool considerably in the next three or four years, particularly
in San Francisco.
Nearly 30,000 units are in the city's
project pipeline now, with nearly two dozen multi-family residential
projects already under construction.
Of those units, some 1,500 -- all located
in Mission Bay and developed by the likes of Bosa, Signature Properties,
Avalon Bay, Urban Housing Group and IntraCorp -- will be coming to market
with similar upscale residences in 2007.
Tishman Speyer's high rise at 300 Spear
Street -- a $450 million development standing as high as 450 feet -- will
also be completing construction in 2007, with 656 upscale condos hitting the
market in October.
Jeffries said Millennium is continuing to
monitor the market's appetite and for now, thinks it will remain as
voracious as it has for the past few years.
Case in point?
Centurion Real Estate Partners, which
purchased the Beacon ealier this year, has sold 286 of the 304 units in the
west tower since March. The group will begin marketing the 304 units in the
east tower in September (renters still occupy most of them, and have been
given notice), but has already sold 50.
"It appears that the more that's
being constructed and the more people you bring downtown ,the more there's a
demand for it," Jeffries said. "It's feeding on itself."
And with and 11-story tower and a
58-story tower, the Millennium project will be quite a mouthful.
The development will reach 645 feet
at its peak, making it the fourth tallest building in the city following the
Transamerica Pyramid and the Bank of America building, which reach 853 feet
and 779 feet respectively. It will be the tallest building constructed since
California Center, which stands at 695 feet, was completed in 1986.
- by Lizette Wilson BIZ
JOURNAL 1 Aug 2005
2006 : Luxury
condos vie for buyers on Rincon Hill
For two years, the Metropolitan has been
the king of Rincon Hill, a sexy development that proved the market for
luxury highrises in the emerging neighborhood.
Not any more.
Suddenly, in addition to views of the Bay
Bridge and Treasure Island, Metropolitan residents can watch cranes erecting
steel to their south and to the east, as Tishman Speyer's Infinity tower and
Michael Kriozere's One Rincon Hill rise from the ground.
The new competition, coupled with a
softening real estate market and the potential for blocked views, has
prompted an increasing number of nervous Metropolitan owners to cash in on
profits and look to defect to One Rincon Hill and the Infinity, although the
two projects will not be complete for 18 months.
Making moves
Over the last several weeks, between 19
and 25 condos in the 342-unit Metropolitan have been on the market at any
given time, and 24 Metropolitan homes have already closed this year. If the
sales continue at the current pace, the building could see close to 15
percent of its inventory (about 50 units) change hands this year. By
contrast, 30 units in the building sold all of last year. McGuire Real
Estate broker said 4 to 6 percent turnover is more typical in a highrise.
Meanwhile, many Metropolitan residents
have already put down-payments on One Rincon Hill, a 55-story tower at top
of the hill that nearly sold out during an extraordinary week of lavish
caviar and cocktail receptions.
Skybox Realty said of the 10 units he has
taken deposits for at One Rincon Hill, five were bought by owners at the
Metropolitan. Hwang, who has three listings at the Metropolitan, said
Rincon's aggressive price point has been attractive to Metropolitan owners.
Both have one-bedrooms starting in the low $600,000.
"It's not like the Met is the only
game in town -- that is not going to work any more," he said. "One
Rincon blew everybody out of the water. It was exciting. It had an identity.
It was 60 stories on a hill."
After two years of brisk sales, units at
the Metropolitan are languishing. Instead of selling in a week, many are on
the market for 90 days or more. In mid June, investor-owner Oleg Chernyak
decided to rent out his unit after it failed attract interest in 30 days.
The corner one-bedroom had been rented previously, and Chernyak didn't want
to be stuck with mortgage payments with no income. He said One Rincon and
the Infinity "definitely affect competition at the Metropolitan."
"People are spending a lot more time
to kick the tires," he said.
Pacific Union real estate agent lives in
the Metropolitan and has been the broker on 60 percent of the condo sales
there. Ultimately, she said, "the Met" -- with the swimming pool,
gym and entertainment rooms typical of deluxe condo towers -- will hold its
own against new neighbors. Kaufman pointed to a double-digit slowdown across
the city. After two years of appreciation averaging 20 percent a year, and
the end of the two-year period during which a seller would have to pay a
capital gains tax, it's natural for Metropolitan investors and residents to
test the market.
"It's a strong enough building to
withstand the competition, but across the board we have a slower
market." she said.
Kaufman said the sellers are fairly
typical of the transient, wealthy professionals attracted to urban highrises.
Of the seven listings she had recently, one of the sellers was a couple who
are building a $4 million home in Palm Springs and need to free up some
cash. Another was an East Bay resident who found he didn't use the pied-à-terre
as much as he had expected. Another was a woman with condos in Arizona and
Vancouver.
Several are investors who are cashing in
after a two-year run-up.
"People get in the game and then
they want to increase position," said Malcolm Kaufman. "One Rincon
is the new girl on the block."
Softer market on the horizon?
The Mark Co., which is marketing more
than half of the city's new condo developments, said some owners are rushing
to sell because they are worried about 4,000 to 5,000 new units coming
online over the next three years. In addition, many have adjustable
five-year interest-only loans, and with interest rates on the rise, they are
in a position where they are forced to sell because they will not be able to
pay the higher mortgage.
"They want to sell at the top of the
market," Mark said. "A lot of the buildings have a huge percentage
of first-time buyers. If they have made some money, they will take their
profits and they will move on."
Others are worried about blocked views,
not only from the One Rincon project, but from the Californian, a 40-story
tower Fifield Cos. is preparing to break ground on just to the east of the
Metropolitan. McGuire's Kaufman said it has been surprising that so many
Metropolitan owners seemed unaware of all the Rincon Hill development that
has been in the pipeline for more than four years.
"You better know what is going on
around you before you plunk down three-quarters-of-a-million dollars,"
he said. "It's amazing how many people don't."
But standing in a unit on the 25th floor
that is for sale, Robyn Kaufman said the trade-off between some blocked bay
views and a more interesting skyline was one she could live with.
"Maybe you're going to lose part of
Treasure Island, but it will bring the city closer," she said.
"The Infinity and One Rincon are are going to be all glass and
glittery. It's going to be gorgeous." - 2006
July 14 SAN
FRANCISCO BUSINESS TIMES
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