“Taiwanese real estate investor Steven Pan has finalized the purchase of 49 Stevenson St. for $24.2 million, the latest sign that San Francisco’s long-dormant investment market is starting to come to life. The $190-a-square-foot sale price represents a 40 percent decline for the value of the property, which the city currently assesses at $41 million.”
49 Stevenson sells for $24.2 million [San Francisco Business Times]

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Comments from “Plugged-In” Readers

  1. Posted by Kurt Brown

    It was the dim sum that clinched the deal, for sure.

  2. Posted by Rillion

    Nice one time bump from the transfer tax followed by a real huge hit on the future property tax revenue…

  3. Posted by 45yo hipster

    This could be the start of more smart investors snapping up distressed office buildings for a 40-50% discount. I bet we’ll see more deals like this in the next few months. I wonder if it will be led by other Asian investor now able to get a piece of prime SF office space. They’re obviously not seeing a japan lost decade episode, so often espoused here!

  4. Posted by Anna

    “They’re obviously not seeing a japan lost decade episode, so often espoused here!”
    Really?
    Q: If you buy at a 50% discount, how many years would it take to get back to the price the person who is selling paid?
    A: A decade at 7% growth. Two decades at 4% growth.

  5. Posted by 45yo hipster

    ^ No shit Sherlock. And it has nothing to do with the situation in SF. My point was that we will not have a lost decade of deflation. And FYI, Tokyo commercial RE is STILL down significantly after 10+ years. That’s deflation for ya.

  6. Posted by The Milkshake of Despair

    I think that Anna’s point is that the recent purchase price already assumes a lost decade (or two). Perhaps the seller’s hand was forced or maybe they just saw the writing on the wall.
    Of course as we’ve seen not all properties in this market are trading at “lost decade” prices. That may change in the next few years. RE prices are very sticky and many owners (especially residential homeowners) are trying to wait out the siege.
    Masada on a personal scale.

  7. Posted by diemos

    “They’re obviously not seeing a japan lost decade episode, so often espoused here!”
    Perhaps they looked at the available cash flow that this property was generating and decided that it made sense at 50% off without the need for any future appreciation.
    In the before time … in the long, long ago … smart, successful landlords wouldn’t even look at a property if it wouldn’t cash flow on day one. The idea of acquiring an asset with negative cash flow in order to secure future appreciation was bubble thinking. It will not survive the popping of the bubble.

  8. Posted by 45yo hipster

    ^ I must disagree diemos. Investors buy lowcash flow performing assets all the time. The idea is to change something, ie tenants, use, remodel, add space etc. Gor instance, in SF many multiunits ate owned long term. The owners have run down, low cadh flow props because their mortgage is low. They finally dump it and
    make a nice cap gain. New younger owner (I.e. Me) comes in with a plan, a tolerance for a bit of risk and some balls. That’s how I have been making my living for years now.
    Granted, some office buyers in 07 made dumb purchases essentially with OPM. But that was a rarity. Usually markets conditions do not allow for this to happen. Usually. Most buyers, big and small either have enough cash to put down to cashflow, or they have a specific plan to incr the props revenues.

  9. Posted by diemos

    Ah Hipster, it’s one thing to have a plan to improve the property but there are quite a few people (Hi Ester!) whose only plan is to let inflation in rents and property values save them. They think they’re landlords when in fact they are primarily speculating on the Fed’s monetary policy. A bet I don’t think they’re going to win in the near term.

  10. Posted by wow

    New younger owner (I.e. Me) comes in with a plan, a tolerance for a bit of risk and some balls.
    Don’t brag too much about balls, as they might one day be served on a silver platter.
    The 2007 buyers of 152-162 Jasper did just that: bought a multi-unit property with a miserable rent and negative cash flow, initiated an Ellis eviction on senior tenants (who probably cannot afford anything else), and got a pack of Supervisor wolves tearing them apart after a tenant suicide and much community action. SF is not for the faint of heart.

  11. Posted by kid char

    i see the editor censures those who call out the usual suspects on their b/s. its okay for diemos to rag on ester but not ok for me to rag on diemos..typical ss.

  12. Posted by anon

    Hey, 45YOH’s patting himself on the back for buying a couple of 3-flats during the biggest housing bubble in history is nothing unusual. Lots and lots of buyers in SF and elsewhere thought they had some magic formula when the place they bought in the ’90s or early ’00s, either to live in or to rent out, went up in value. Nope, just the bubble. We saw the same thing with all the self-proclaimed genius day-traders during the dot-com bubble. Those who bought RE post-2004 are feeling a ton of pain as the magic has worn off.
    I’m glad 45YOH can afford to stay out of the office and eat cheap Asian food for lunch. But lucky timing and investment skills are two different things. The easy money is gone, and only those who are very smart and work hard at finding the right deals will be able to make a go of it for the foreseeable future.

  13. Posted by sparky-b

    anon,
    Are you the same guy who is anti-diemos, are you also ant-anonn and anti-tipster…geez pick a side and a handle.

  14. Posted by Brahma (incensed renter)

    So we can distinguish you from ‘anonn’, ‘anonm’ and all the other anonymous cowards. :-)

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