April 24, 2009
One Rincon Hill Sales Update: Phase One 70% Closed Or In Contract
272 of the 390 condos in the first phase of building at One Rincon Hill (376 units in tower one plus 14 townhouses) are either closed or in contract including all units below the 32nd floor.
As we noted earlier this week, that represents little movement in terms of net-new sales since October 2008, but with over 50 new contracts having been written since the beginning of the year it also represents average sales activity of roughly 12 units per month in 2009.
At its peak in late 2007, roughly 98% of tower condos were in contract which would suggest around 45% of "sales" have fallen out of contract at one point or another. And as late as August 2008 roughly 92% of the first tower was either in contract or closed.
First Published: April 24, 2009 11:30 AM
Comments from "Plugged In" Readers
Related to ORH and Rincon Hill development (or lack thereof) in general, I thought it was a great query by Commissioner Antonini at yesterday's Planning Commission hearing about studying the nexus between developments in Rincon Hill and gentrification or whatever in SOMA for which the SOMA Stabilization Fund fee of $14 or so per square foot was created to help mitigate. An even better question is why is the Rincon HIll area the only area that pays into the SOMA Stabilization Fund - wouldn't residential buildings 85 feet and higher in other areas of SOMA also have this affect on SOMA? The "home prices only go up" mantra in peoples' heads in 2005 when the SOMA Stabilization Fee (ransom, in my opinion) was put into place was incorrect ... and the RIncon HIll neighborhood may take a lot longer to see developed as envisioned because of these additional costs - let's either have a more equitable implementation of the SOMA Stabilization Fund to affect the residential developments just across Folsom as part of the Transbay Redevelopment Area, mid-Market, Yerba Buena, South Beach, and Mission Bay ... or let's scrap this fee (I'm for the latter).
Posted by: jamie at April 24, 2009 11:53 AM
Just to be clear - if the 70% percentage has not changed since October 2008, there would need to be a corresponding 12 units falling out of contract each month to maintain the equilibrium.
Doesn't that seem a bit high to anyone else? That's a lot of people just walking away from their 3% deposits.
Posted by: puzzled at April 24, 2009 11:55 AM
Not when you consider values could have easily dropped 3% and more depending on the negotiated contract price. Unless one if planning on staying 5-10 years it ends up saving them money..
Posted by: gowiththeflow at April 24, 2009 12:01 PM
Jamie, the developer AGREED to the fee in advance. And you and other buyers AGREED to whatever bubble price you paid. I realize bail-outs are all the rage now and we can question/criticize the reasonableness of the initial condition (that everyone AGREED TO) but I don't sympathize. At all.
Posted by: shza at April 24, 2009 12:17 PM
Where is this information received?
My guess is a large percentage of that 272 number are "in contract" and not closed. This may mean the original "buyer's" agreement was never canceled when they bailed. This is very typical in RE development to keep your project funded and looking healthy.
Posted by: SFn at April 24, 2009 1:38 PM
I don't live at ORH ... and my point is from the perspective of how fair is this SOMA Stabilization Fee if the Rincon Hill planning area is the only little chunk of SOMA or San Francisco in general that requires new developments to pay into it - and is there really a relationship between the few block of the Rincon Hill planning area and gentrification or whatever the SOMA stabilization fee is supposed to mitigate - or is there just as much of a gentrification effect on the large SOMA area from any other building within SOMA that is 85 feet high or higher (or maybe no effect at all since property values clearly haven't kept going up).
While the personal attacks might make you feel good .. I'm trying to discuss the issues.
Posted by: jamie at April 24, 2009 1:49 PM
I'm not arguing against ORH paying the fee ... I'm questioning whether it will further delay and hamper Rincon Hill becoming a neighborhood. The Guy Place Mini Park is on the shelf because ORH's single tower is the only constructed development that fell under the RIncon Hill Plan. The idea of retrofitting the Sailors Union Of the Pacific building and using its extra space as a community center is even further back on the shelf. Streetscape improvements, with the exception of in front of One Rincon Hill and the sidewalks surrounding The Infinity are just a dream for those of us who would like to feel safer walking around our neighborhood.
When people drive off the Harrison Street ramp from the Bay Bridge and go down that first block north on Fremont Street, does it look like a promising neighborhood to you? I'm questioning this fee because I'm afraid it will be a huge impediment to getting Fremont and these other blocks in Rincon Hill developed.
Sorry ... I know most of you have no freakin' idea and couldn't care less about my neighborhood, but I care a lot ...
Posted by: jamie at April 24, 2009 1:56 PM
I didn't make any personal attacks, unless you consider it a personal attack to note that folks who bought into ORH paid bubble prices. I just consider that a fact.
I was also discussing the issue, namely that even if the developers of RH thought it was "unfair" that they would have to pay a fee not required of developers in other parts of SOMA, they decided the projected upside still made it a good risk to take in paying the fee and building. Period.
Posted by: shza at April 24, 2009 2:00 PM
different neighborhoods have different fee requirements. There's Eastern Neighborhoods fees, Market Octavia fees, Visiticaion Valley fees, Balboa Park fees, downtown fees, mission bay fees, etc. It's totally irrelevant that no other districts pay into this one -- this fee was set up for Rincon Hill, just like those other neighborhoods had their own fees established unique to those plan areas. You're getting hung up on the nomenclature -- get over it. They might as well have called the SOMA stablization fee as the "rincon hill affordable housing fee" and you would be less concerned. In fact, the Planning Commission, when adopting the Rincon Hill Plan, actually adopted a separate resolution instructing the Board to adopt a special affordable housing fee on Rincon Hill that would build affordable housing and other things in the broader SOMA. So it's both not accurate to put this one on either the Board or Daly specifically, nor is it accurate to call it unusual or unique.
Posted by: intheknow at April 24, 2009 3:13 PM
are either closed or in contract including all units below the 32nd floor.
this surprises me.
i would have thought that the upper floors would do better, as they are more of a premium product.
instead it's the more affordable units that are closed/in contract.
Posted by: ex SF-er at April 24, 2009 3:18 PM
Jamie: Sorry to hear about the delay to the mini park. The sidewalks and benches along the Infinity do definitely make a difference to that immediate area. Rincoln Hill is still very much a work in progress but it has come a long way just over the past couple of years. Your passion and dedication to your hood is to be admired.
Posted by: Willow at April 24, 2009 3:48 PM
are either closed or in contract including all units below the 32nd floor.
#801 is still listed on MLS. My friend was looking into unit #1908 (?? corner unit) last week and it was still available.
Posted by: anon at April 24, 2009 4:00 PM
does anyone know what the top floors were going for originally when they were 98% under contract? If the remaining 30% are concentrated on the higher floors that's not good news for the developer. The higher floors are the ones that have the biggest margins and these aren't selling. Wonder if they would even fetch the original asking price? Question is how long can they keep carrying the costs, no closings since October is a pretty long time already. To add insult to injury, if the current sold units are occupied by renters, the target prices are harder to get. Anyone had any recent experience with the sales staff?
Posted by: viewlover at April 24, 2009 8:30 PM
Haven't we had realtors come on here and mention they are closing (or putting in offers on) like 5+ units a week? Or was that another development?
Posted by: lolcat_94123 at April 24, 2009 8:51 PM
The fact that only the lower floors are selling at ORH is not surprising. The same is true at the Infinity and likely elsewhere. You simply cannot get the best going rates for condo purchases above the conforming limits, the requirements are stiffer and down payment higher. A 1.2M condo requires a 30% down and the rate is around 6.5% last I looked. The minimum income of $250K is less an obstacle compared to the $360K down payment plus closing costs given how most stock portfolios are in tatter.
Posted by: Outsider at April 25, 2009 12:53 PM
A reason the higher units are available is they planned the closing and move-ins from the bottom up. The process worked well because there was still work being done on the upper floors. Things progressed very well until last Fall when the equity markets crashed. A great deal of wealth and liquidity was no longer available to the buyers. At the same time, credit underwriting tightened significantly. This situation also adversely affected many other projects, Infinity and Millenium to name two.
Posted by: itsknotme at April 27, 2009 1:28 PM