Car nuts take note, the 953-square-foot one-bedroom #303 at The Palms (555 4th Street) is on market, bundled together with 116 of the parking spaces in the building’s 300-car garage.

A couple of things to keep in mind: 1. if you don’t happen to need all 116 spaces, they can only be rented to those who own a condo in the building, and 2. there are no restrictions on the rate for which the spaces can be rented nor rent control (which is more of thing to keep in mind if you’re currently renting one).

Contact Colliers if you’re interested.

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Comments from “Plugged-In” Readers

  1. Posted by Confused renter

    Sounds like a fire sale!

  2. Posted by Alai

    …so is there more to this story?

  3. Posted by Dave

    Isn’t all new construction exempt from rent control anyway? Anything built after 1980 or so? So what is the big deal regarding no restrictions on the rent price or rent control? Is the unique thing here the fact one is allowed to rent one’s parking space? Is that sort of thing prohibited in some other condo buildings?

    • Posted by BobN

      I think they’re highlighting the upside of a (relatively) captive market with no restrictions.

    • Posted by Mr Pants

      This is renting of the parking space. The HOA has rules on what the said parking spaces that are attached to this unit can be used for.

  4. Posted by curmudgeon

    But I’m sure you can rent to someone who has a condo in the building who can in turn rent it out to anyone else….. This is actually a fantastic shared parking location for reverse commuters to the peninsula….they could occupy it from 7 AM to 7 PM and then have the unit owner parked overnight…. Yes, and I want to know the backstory on this as well! I’m assuming the developer kept ownership of this?

    • Posted by Dave

      Good idea except these can only be rented to people who live in the building. I assume anyone trying to do this 7AM to 7PM thing would be noted by the HOA and dealt with accordingly.

      • Posted by curmudgeon

        well yes of course. I was talking about what makes sense versus the letter of the law (or, rather, condo association documents). That’s why I, not half facetiously, suggested that whoever buys this resource rent only to owners in the building, but look a blind eye at what those owners actually do with the space. Because whoever owns 116 spaces will have a very big target on them if they start advertising on craigslist. But other owners can basically do what they want on an informal basis, and there’s probably not a whole lot of chance for them to get caught. And they definitely wouldn’t implicated the “master” owner. Therefore if you were calculating an offer value for the condo and 116 spaces, you’d have to calculate a substantial discount to market rent.

        • Posted by Johnathan Asturias

          Funny, this all to easy. Now how will said owner get 116 garage door openers for non-residents? The reason why non owners cannot rent car spaces is because it is a security issue. Try having 116 individuals who care nothing about the community, they can break in other people’s cars, steal bikes.. etc.. etc..

          • Posted by curmudgeon

            fantastic! lol. I’m assuming that if an owner acquires another space for their “second” car, they are also entitled to a garage door opener. Otherwise nothing makes any sense. It’s not like this never ever happens. It happens in virtually every residential garage in popular locations. The difference here is the sheer scale….. but again, that’s why I said that the owner of the 116 units needs to externalize to other unit owners the renting of spaces to outsiders. The question is why in the world was this developed with a 300 car parking garage in the first place? Honestly, the better answer would be for the HOA to purchase the entire package and devise a logical system for renting them out on the open market.

        • Posted by Dave

          Why would the potential person calculating an offer have to discount to market rent? The offer should be based on market rent and from there projected ROI.

          Another factor, as the owner of the spaces, there will be liability issues should some sub-renter get into an accident in the garage or have their car broken into.

          • Posted by curmudgeon

            Dave, because the buyer of 116 parking spaces can’t list them on the open market, but can only list them to other unit owners. That assumes that the unit owners either use them for their personal vehicles or take the chance of marketing them on the open market. So the buyer of the 116 spaces will need to market them internally at a substantial discount to the market price for parking in the neighborhood. How much I don’t know….maybe 50%?

          • Posted by Dave

            OK. When I said market rent I meant the rents the spaces get in that building and not what rates exist externally in public parking in the area. The building is a market unto itself as would be similar condos in the area with owner rental parking in the building.

            External public parking is more expensive as they charge oftentimes by the hour or half day and jack rents up to the max. When my ophthalmologist was at Berry Street the only reason I parked there was that the office vouchered patient parking. To me the Berry Street parking is a different market.

  5. Posted by AnonAnon

    But I have 117 cars.

  6. Posted by Poor in Potrero

    what is it listed for? 115 spots (assuming you keep one) @ 200-300/month is a nice chunk of annual income.

    • Posted by Freeloader

      I’ll put the over under at $8.88M

      • Posted by Freeloader

        Calculation:
        20X multiple i.e. 5% earnings on estimated income of 444K/yr, or 37K/mo, or $319/mo per spot.

        Or you could look at it as 4% earnings @ $253/mo/space.

  7. Posted by Hank

    Our condo building does not allow you to rent out a parking space to anyone who lives outside the building. This is a security concern.

  8. Posted by Alai

    So it’s a condo building with 300 units, and the condos have all been sold, and it was built with 1:1 parking.

    There seem to be (at least?) seven other condos for sale in the building, and six appear to have deeded parking spaces, while one doesn’t (“Leased parking available as well as option to purchase a space”). I wonder if the “option” is for one of these 116? Odd that so many of the for-sale condos have parking, when there must be a lot without.

    Maybe the developer was not happy with what buyers were willing to pay for parking spaces, and kept them as rentals in hopes that they’d appreciate in value, and is now cashing out? You’d think whoever owned them would get better prices by selling them individually to other condo owners.

    Maybe if you owned them all you could do something different with the space? It must be 35,000 square feet+. Conceivably, if the HOA and the city agreed, you could even build something like a supermarket, as has happened in some other underground spaces. Low ceilings might make that difficult, though.

    I wonder if this is a symptom of falling demand for parking– will we be seeing more of this sort of thing?

    • Posted by Alai

      There’s a big, underused lot next door. Maybe if/when it gets built on, it can be built without a garage, and instead have its residents use the existing garage…

    • Posted by curmudgeon

      Now that I think of it, I think that the Palms was one of the first SF housing developments that was built with “unbundled” parking (not tied to a unit). The developer probably thought they needed 1;1 parking to finance and sell units (as unbundling was pretty rare at the time). I’m guessing that in the end many folks didn’t choose to buy it, particularly because parking in the hood was much easier at the time, and they may have felt it was cheaper to lease off street parking, or take their chances on the street. I’m just guessing, but I think that’s a plausible reason the developer (presumably) or successor ended up holding so much parking. Seems to be very good evidence that the lower parking ratios used by the City now are in fact just fine.

      • Posted by DM

        Anybody who takes a chance on parking their car on the street 24/7 is just asking for it. With all the vandals and drug addicts looking for easy pickings (easily sellable stolen items) you would have to be crazy to park a half decent car on the street.

        • Posted by curmudgeon

          and yet the streets are full of cars, so there is that.

          • Posted by Jake

            the street parking isn’t full overnight, and yet the gutters are often littered with shattered car window glass. The ruthless evidence of supply and demand….

      • Posted by BobN

        I suspect a lot of people rationalized their condo purchase with the “savings” of not having to buy a parking spot, relying instead on local streets. As those street parking spaces have gotten harder to find, some might regret it. Some might not care that much that they’re paying as much or more to rent a spot instead of gaining a bit of equity with every monthly payment.

        The only way to be more certain would be to know how many of these 116 spots are rented out on a regular basis. If they’re all rented out, it’s pretty good evidence that the parking ratios used by the City are not in fact just fine.

        • Posted by BobN

          And the only way to be truly certain about the City’s parking ratios would be a survey of residents of projects built in the last ten years, examining car ownership numbers versus provided parking. In a city that apparently LOVES to needlessly study and restudy things, you’d think that one would be a nobrainer. But no. Someone should maybe study why…

          • Posted by curmudgeon

            I’m actually in agreement with you here. It would be great to study car ownership and car ownership trends in all of the new condo buildings that have gone up over the last two cycles, many of which have been built with way less than 1:1 parking. We’ve got lots of anecdotal evidence, but I’d love to see more actual evidence. And you’re right…it would also be VERY interesting to see how many of those 116 parking spaces are used (and by who). And the theoretical potential buyer would be VERY interested in that info!

          • Posted by BobN

            It’s one of those things everyone really wants to know but no one wants to know….

          • Posted by BobN

            Like how much your partner “dated” before meeting you, for instance…

          • Posted by Alai

            Well, the rub is that obviously people will use more of a thing that’s provided for free than a thing they have to pay tens of thousands of dollars for.

          • Posted by Jake

            there’s plenty of statistical evidence about car ownership rates in SF. Both the US Census Dept and CA DMV publish their stats annually and have for decades. Very simply, car ownership is strongly correlate with income, particularly in the areas of SF where owning a car is somewhat optional, such as SoMa and other areas within easy walk/bike/muni of the CBD. I’ve explained this before on SS.

            As for whether SF’s parking ratios are just dandy or not depends on what results you want to achieve. They have negligible effects on the congestion in areas like SoMa because about half the cars during the worst traffic are registered in neighboring counties. Remove an SF SoMa car and it gets replaced by a San Mateo car or an Alameda car or … Same thing happened with folks that switched from driving into the CBD to biking into it. The parking spaces they freed just got filled by cars from further out.

            If the effect we want is to reduce the worst congestion in SF, then the parking we need to reduce is for office workers that commute into the CBD from the suburbs, be those suburbs in other counties or the sublurbanea of the county of SF.

  9. Posted by SFrentier

    This situation is just plain silly. Unless you can cut a legit deal with the hoa these spots are going to be of limited value. (You’d have to basically rent or sell them only to existing owners for their own use.) Probably worth finding a way to secure the building while still giving outsiders access to the garage. At income north of $25,000 per month you can just play hardcore-garage-rentier and quit your day job 🙂

    I wonder how much this thing is going for?

  10. Posted by scott f

    Convert 100 of the parking spaces into a PDR facility. I hear those are in demand.

  11. Posted by SFrentier

    This place would be good for jay Leno

  12. Posted by AlfieJr

    astounding ignorance. those of us that live here know there is huge parking demand within all the new condo projects like this one in SOMA. every owner wants one space for convenience and unit value, and many are two car households that want two – or more. there is always fierce competition among the owners for any available space. plus no one wants to walk to a parking lot someplace outside the building, forget that. figure $400 per month for a space, about 50K per month gross revenue for them all.

    • Posted by anon

      And yet here we have a building with 116 spots unsold.

  13. Posted by EBGuy

    Pay On Time LLC. Who do I make the check out to? Hilarious.

  14. Posted by The Milkshake of Despair

    This ranks as one of the strangest residential offerings in recent years. The New Albion Brewery with a productive spring in the basement comes to mind.

    I think Alai has this one figured out. The developer or some connected insider is tired of his/her assets tied up in a parking rental business and wants to move on. It would be interesting to know the deets on what percentage of those 116 spaces are currently rented.

    • Posted by BobN

      There was a sale like this in a condo complex on… Fulton ? near Alamo Sq. I think it was maybe 27 parking places??? I don’t think it was tied to a residential unit though.

  15. Posted by condoshopper

    if you buy a parking space, does it remain “unbundled” from your unit? could you sell off your parking space alone, at a future date?

    • Posted by Alai

      That’s my understanding. I recall reading some complaints from people who had to pay property tax on both their condo and their parking space, because they were two separate properties.

    • Posted by curmudgeon

      yes, once unbundled, always unbundled.

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