April 16, 2007
Why You Should Care About All Those New Developments (Part I)
Realtor Malcolm Kaufman’s latest Pulse of the Market focuses on South Mission Bay. And two paragraphs in particular caught our attention:
While I have had a casual interest in the unfolding Mission Bay development, my interest became more focused because of clients who currently live in a single-family home in Noe Valley. She is an artist, he a serial-entrepreneur, and while they like and enjoy Noe, they would like warmer weather and a simplified life-style, one that includes updated construction/amenities and the concomitant ease of condominium living – a story that is becoming more familiar each year.
We have talked on an off for a year about their moving to one of buildings north of Mission Creek. It seems that there is a different life-style being offered by the Radiance [Editor’s note: Location marked by orange ellipse above.] and other housing opportunities in the southern portion of Mission Bay. While the area is unfolding as less urban than the developments of South Beach, Rincon Hill and Transbay, it is still quite close to the financial district. . . . One of the drawbacks is that there are very limited neighborhood amenities at this time [Editor’s note: Again, see picture above.]. It is going to take awhile until 4th Street becomes the Chestnut Street of Mission Bay - that’s the plan.
A couple living in an established neighborhood (not to mention a single-family home) are considering a move to Mission Bay (not to mention a condominium)? Inconceivable!
And yes, it is but a single anecdote. But as Malcolm also notes a few paragraphs later, “Transaction volume [in San Francisco] is down again in the first quarter of 2007: off almost 10% for single-family homes and down 20% for condominiums (582 for the first 2006 quarter versus 465 for Q 1 2007). While the volume of condominium re-sales is down dramatically, a lot of the buyer demand is being absorbed by new product sales in the south of Market neighborhoods…”
And you wonder why we spend so much of our time tracking all these new developments.
∙ Malcolm Kaufman’s Pulse of the Market [sfpulseofthemarket.com]
∙ An Overview Of Mission Bay [SocketSite]
∙ SocketSite Reader’s Report: Living In North Mission Bay (For Real) [SocketSite]
∙ Radiance At Mission Bay: Sales Office Open [SocketSite]
∙ SocketSite’s Complete Inventory Index (CII): Q1 2007 [SocketSite]
First Published: April 16, 2007 8:45 AM
Comments from "Plugged In" Readers
For all this debate that we've been having about the number of amenities in the South Beach area, this is a clear example of the changing mentality of the residents of SF, that they're now seeing that the same old neighborhoods aren't the only option. Also, this shows that the residents of the area are not just out of towners, who don't want to be part of the social fabric of the area. I think that we can now say that the general area has finally been discovered. Heck, I even talk to friends who live in the Marina and are talking about hitting some bars/restaurants in South Beach, and not after a Giants game. You never used to hear that.
I would say that in the next 2-3 years, we'll see the rate of acceleration increase in terms of both developments and adding of amenities (both locally owned establishments and chains).
The older neighborhoods will always be nice and quaint, but I think the days of saying that there's nothing worthwhile south of California street are no longer.
Posted by: SFhighrise at April 16, 2007 9:41 AM
"The older neighborhoods will always be nice and quaint, but I think the days of saying that there's nothing worthwhile south of California street are no longer."
You could have said that 10 or 15 years ago.
Posted by: D_INC at April 16, 2007 10:41 AM
"You could have said that 10 or 15 years ago."
Right, I definitely agree. However, some people still say that, as they live in a myopic world.
Posted by: SFhighrise at April 16, 2007 10:44 AM
In addition to the UCSF Mission Bay biomedical research campus, UCSF has decided to build its new children's hospital, women's hospital, and cancer hospital just south of the research campus-- which will bring a lot of employees and visitors to the southern end of Mission Bay.
Posted by: Dan at April 16, 2007 12:02 PM
I completely second Malcom's view as to living (or in his case, the prospect of living) in this part of the city. Warmer weather and the excitement of new up and coming neighborhood is certainly going to create a lot of demand out there (sorry to say to all the old school SF die hards, but it's true).
And for those of you cynics out there that keeping insisting that everything will implode, that the economy will collapse, that the politicians will shut it down, etc., etc., and that the area will never go anywhere and will regress back to its late 20th century industrial roots....you're kidding yourselves. Accept it or not, the transformation (while certainly far from complete) is happening and it's way too far along at this point to stop now.
Posted by: RinconHill_Res at April 16, 2007 12:36 PM
@Dan -- please note that many of these research/faculty/staff are not high-wage employees.
The ongoing transformation of mission bay may nevertheless not support the kind of prices we are seeing now.
Posted by: dub dub at April 16, 2007 4:44 PM
1. The whole south waterfront area, from the bay bridge to Hunter's Point is ripe for gentrification/redevelopment: a) the weather is nicer than most of the rest of SF, b) land and property prices are still realtively cheap and c) there are water views to be had. It may take a while, and it may slow way down if the economy falters, but the gradient is there. The new light rail along third street is also an important factor. It helps make the area seem more a part of the city.
2. The population cohort now approaching retirement, the baby boomers, turn out to be quite averse to institutional living (or so the trend watchers tell us). Where their parents may have moved into an actual retirement community they are having none of it. They're tired of the burdens of homeownership, though. The answer: a condominium. The hotel condos, the Four Seasons, The St Regis, etc. have already tapped into this market big time. Essentially they offer assisted living without the stigma. But upscale condo develpoments with concierge services are offering similar amenity at a lower price (and even less stigma). Maybe you can't get room service, but you can certainly have restaurant meals delivered. The boomers are a big segment of the population. And they have only just begun to retire.
Posted by: Salarywoman at April 16, 2007 5:08 PM
Radiance sells for well over $1000/sqft for any kind of water views. Isn't that still expensive for an area in a mist of a transformation?
It'll probably take 5-10 years for 4th street to develop into a retail hub. So paying $1000/sqft now for a neighborhood that's devoid of any retail amenities is risky, no?
And I agree with dub dub. How many of the workers at the UCSF campus or at the biotech companies can afford to live in Mission Bay?
Posted by: missionbay res at April 16, 2007 5:15 PM
What makes a "nice and quaint San Francisco neighborhood" has much less to do with "oldness" or "location" than whether the neighborhood was created pre-or-post the S.F. Planning Department.
For example... about 75 years ago, subdivisions built by largely unregulated private developers sprouted up like weeds on the City's edges.
We know those "unregulated" (sprawling) developments today as: St. Francis Woods, Miraloma, Forest Hill, the Marina etc.. Looking back, the self-regulated private developers did pretty good!
Then came the ruinous takeover of large scale private development by SF's public "Planning" and "Redevelopment" Departments.
Lets face it... It's simply not possible for a bureaucracy that places priority on such things as: "Policy","Process" and "Transit" to produce anything that resembles a genuine neighborhood.
A few of their Greatest Hits: Bayside Village, Fillmore Center and my favorite - Opera Plaza. Yuk.
Posted by: sonofsoma at April 16, 2007 5:43 PM
As an academic employee of UCSF who will soon be moving from another campus to Mission Bay, I can assure you that almost none of the people who work in those buildings can afford any of the nearby housing discussed on this web site. Senior faculty and doctors, yes. The bulk of the staff? Not a chance.
Posted by: AcademicRenter at April 16, 2007 10:27 PM
But what will this couple do after they have moved to Mission Bay and they have a kid? Haven't they noticed that having a child in Stroller Valley is like having a dog in the Castro? It is the ultimate accessory!
Posted by: CastroLiverDogpatchWorker at April 17, 2007 8:02 AM
“How many of the workers at the UCSF campus or at the biotech companies can afford to live in Mission Bay?”
As wrong as it may seem, although the bulk of those who will end up working in Mission Bay will likely not be able to afford to buy in the area, their presence will support more local restaurants and shops that will make the area more attractive to those who can.
Posted by: Michael at April 17, 2007 9:42 AM
"As wrong as it may seem, although the bulk of those who will end up working in Mission Bay will likely not be able to afford to buy in the area, their presence will support more local restaurants and shops that will make the area more attractive to those who can."
Spot on......that's the main point. It's not whether they can afford the live there, it's merely the fact that they will be there.
"A few of their Greatest Hits: Bayside Village, Fillmore Center and my favorite - Opera Plaza. Yuk."
100% agreed, except that you've drawn a very poor analogy between these areas and what is already the Mission Bay area. It's just not a good comparison for too many reasons to go into on a single post.
Posted by: RinconHill_Res at April 17, 2007 12:29 PM
For all you pessimists,
Today, April 18, 2007, the Port of SF announced plans to consider development of Seawall Lot 337 (Parking Lot A, south of Pac Bell Park). The proposals included a mixture of Residential housing, office, hotel, recreation, parking and retail.
This same change in the zoning of "Seawall" parcels that the Port controls could affect the future use of Port parking lots north of Pac Bell Park, all the way to Pier 35. All of these parcels, if the legislation as proposed is approved in the State legislature, could include housing (market rate or other types of hosing). This would affect supply of hosing in the central and north waterfront for years to come,
Also, tomorrow, April 19th the Port is considering improving Piers 35 and 27 to possibly replace Piers 30-32 as the future Primary Cruise Terminals for the City. The meeting is open to the public at Pier 1, 3 to 6 PM. The "Primary Pier" selection is scheduled for 5:30 to 5:45 PM.
I understand the budget for the new UC Hospital in Mission Bay is $1.2B.
The budget for the Transbay Terminal is close to $3B (2007).
These are not small investments in SF’s future.
The SF Redevelopment Agency has hit a couple of HR's. Believe it or not, before Opera Plaza, that site was home to a Doggie Diner and some of the most dangerous dope deals in the city.
All of the development north of Market St including the Hyatt Hotels, the Embarcadero Center, the Maritime Plaza (Alcoa Building), the Golden Gateway Center (still the largest rental complex in the City) and the Golden Gateway Commons condominiums were developed under the SF Redevelopment Agency. All of these components have won International design awards, not to mention those office buildings garner the highest office rents in the City.
The Redevelopment Agency is about to be responsible for the TransBay Terminal - Rincon Hill area. The proposals for the future of these areas will really put a stamp of the city's future. Ask Renzo Piano AIA.
Finally, our last residential real estate downturn occurred from mid 2000 to 2001. In 2000, interest rates were 8%, not 5% to 6% that is available today. From 2000 to 2003 the Bay area lost 300,000 jobs. From what I understand, today, the SF Office market is down to 8% vacancy for AAA buildings and this year, from over 25% vacancy in 2003. Although we are only in April, 2007promises break all records for sales of Office buildings in San Francisco. Someone is betting on the future for SF.
329 Bay Street - North Beach, offered 21 condominiums for sale last Saturday, $600K to $800K+. 18 units were taken by Sunday, several with multiple offers, as of April 19th 3 were still available. None were foreclosed on, as of today.
There must be a recession somewhere, I just don't know where it is.
Posted by: Frederick at April 19, 2007 12:43 AM
"All of the development north of Market St including the Hyatt Hotels, the Embarcadero Center, the Maritime Plaza (Alcoa Building), the Golden Gateway Center (still the largest rental complex in the City) and the Golden Gateway Commons condominiums were developed under the SF Redevelopment Agency. All of these components have won International design awards, not to mention those office buildings garner the highest office rents in the City."
Unfortunately most of these projects are so huge that they don't integrate well into the fabric of the city. For instance, the Embarcadero center walls off views from downtown to Telegraph Hill. The Hyatt is a concrete monstrosity that looks like it was airlifted from Soviet Russia.
I lived in the Golden Gateway Appts for a few months, and I will say that this part of the redevlopment was a success. Having the Safeway literally below you is Über-convenient and a big plus for us downtown office workers (sometimes Walgreens doesn't have everything you need!).
Posted by: Jordan at April 19, 2007 9:11 AM
I like your optimism. It's good to be optimistic, but it is also wise to be skeptical.
Re: "Finally, our last residential real estate downturn occurred from mid 2000 to 2001. In 2000, interest rates were 8%, not 5% to 6% that is available today. From 2000 to 2003 the Bay area lost 300,000 jobs..."
It's my judgement you minimize the risk inherent in buying today. While no scenerio is certain,and past performance is no guarantee of future results, if interest rates were to return to the levels of 2000-2001, affordability would drop to extremely low levels. (It's already low). One of the major factors in the rise of home prices has been the (historic) decline in interest rates.
Because of demographic trends, new neighborhoods are certain to develope in SF. The pace and success are uncertain. Act accordingly.
Posted by: Cary at May 21, 2007 10:46 AM
(The below comment was also posted to the March Blog which discussed pricing and availablity of units; I did not know which was more approprate location).
I went by to check the recent developments of the Radiance project week before last. It appears that most of the units were on hold with the exception of the first floor three-story town homes and the fourth floor (patio level) units. The agent indicated that she thought they would be receiving their white papers the following Tuesday. At this point all potential buyers with reservations would be required to sign a purchase and sale agreement.
When I enquired about the firmness of these reservations, the agent told me that she believed that over 80% of units would enter into a PSA. I indicated that she would be lucky if 20% of the units entered in to a PSA given San Francisco’s current slump in condos and the over development of the Mission Bay Area. She felt confident that given the developer’s reputation that she was correct. I could be wrong but I think one of us has been sitting in only a swimsuit on a beach in San Francisco recently-this would cause a mind numbing experience after all.
Personally I think these units are about $200-$300 k over priced given the current market. At over $2.3 million for the most expensive unit, in a condo community without a pool (but there is a fire pit to thaw anyone out from sitting on the beach), I believe you will see these units on the market for a while until adjustments are made in the list price or concessions are offered
Posted by: r00ey at May 27, 2007 8:02 AM
Does anyone know how the sales are going here and whether one should be asking for concessions at this point if making an offer? It seems like there was a rush before to reserve the units and that there is a wait list for the units (well, per sales staff)... i have a reservation and the clock is ticking re signing the sales agreement.. also did not have broker so it seems we should ask for some portion of that commission that would have gone to a real estate agent... ugh, wish I were born with a stomach for negotiating! anyway, any advice appreciated.
Posted by: need to sign at June 19, 2007 3:09 PM
Not sure how they are doing. I have heard conflicting reports. I agree with the other comments these condos are very high for the neighborhood. Apparently there are changes that can be made when you meet with the designer to pick the finishes, perhaps you can ask for hardwood floors in the bedroom or different appliances. If you are looking for a reduction in price you will most likely have to wait until fall.
Re: Negotiations-I was raised with the thought that it never hurts to ask, but if you do not ask you cause the worst case senerio.
Re: Agent matter, many of these developments have a requirement that you indicate who your broker is at the time of the first visit.
The developer has started driving the piles for the two 16 story towers. Apparently they are under time lines to begin construction of each phase of the project. Failure to do so could cause loss of site control.
Let us know how your negotiations work!
Posted by: me at June 21, 2007 4:37 PM
Just talked to our agent with the developer, we just found out that the units are heated by tacky wall heaters! What I have heard todate is that everything would be high end, nothing like spending over a million dollars and having the place heated something that looks like it belongs in a housing project.
We were told that the units would have radiant heat from below the hardwood floor. We will be looking for a major price reduction if the developer is going to present this as a finished product!
Posted by: Baba at June 25, 2007 5:56 PM
That, I must say, is shocking.
Posted by: john at July 9, 2007 8:47 PM