homesmillbrae.com » Embarcadero

Bay Area rental pendulum swings to condos

Wed, 21 Aug 2013 05:40:12 +0000

Some condominium complexes opened at the worst possible time – in the depths of the real estate downturn when home buyers were few and far between. They coped by becoming for-rent apartment buildings instead. But now, as the housing recovery accelerates, several East Bay and South Bay developments are switching back to for-sale condos.

“The pendulum has shifted,” said Michael Reynolds, managing partner of developer Embarcadero Pacific, which specializes in high-density urban infill projects.

In 2009, his firm opened The Bond, a 101-unit complex in Oakland’s Jack London Square area, as rental apartments. Now it’s switching the building over to condos, taking advantage of buyers’ avid appetites for real estate and the dearth of for-sale inventory. About a quarter of the units have sold in less than three months.

“Rents are rising too quickly that if you can make a down payment, the cost of ownership is lower than leasing,” Reynolds said. With a boutique hotel feel, the building has units ranging from $350,000 for a one-bedroom to $1.25 million for a top-floor galleria penthouse.

The Bond was always intended to start off as rentals and then switch to condos when the time was right. But other complexes that opened during the downturn intending to be for-sale had no choice but to become rentals “when the music stopped,” as Reynolds put it.

Condo to rental, back

For instance, the 125-unit Broadway Grand in Oakland, developed by Signature Properties, first opened as a condo complex, sold 17 units, and then switched to rentals as the market tanked, said Paul Zeger, a principal at PolarisPacific, which is marketing it and some other conversion projects. Last year it went condo again, and now has sold all but 11 of its units.

Similarly, the Skyline in San Jose with 121 units is now switching to condos after opening as rentals during the downturn. In Emeryville, the 424-unit Bridgewater is switching from rentals to condos. The current phase II, which started in June with 174 homes ranging from $185,000 to $450,000, is finding a receptive audience, said Alan Mark, president of the Mark Co., which is marketing the complex.

Other Oakland complexes, including 288 Third and Uptown, have already made the switch.

With only a few dozen condos on the market, the conversions stand out.

“The (East Bay) condos that are for sale are snapped up quickly,” said Anne Feste, an agent with The Grubb Co.

Some buildings benefit from Oakland transport changes. “Transportation options have blossomed with the Free B downtown Oakland shuttle (which runs along Broadway from Jack London Square to Downtown, Uptown and beyond) and the SouthSF Ferry for people in the tech world to get to work,” Feste said.

‘More for your money’

Then there’s the affordability factor.

“You get a lot more for your money in the East Bay,” said Mike Wilkes, who recently relocated from Portland, Ore., with his husband, Grant Barth. “We would pay easily over $1 million in San Francisco for something comparable to what we bought for under $700,000 at The Bond.”

The East Bay and South Bay apartment buildings’ switch to condos is worlds away from San Francisco’s contentious condo conversions of tenant-in-common units, which generally are in buildings with just a handful of units. The current breed of condo conversions involve properties that were approved as condos before they were even constructed. That means going condo is relatively simple.

“Demand has spiked for for-sale housing,” Zeger said. “Buildings that have a ‘condo map’ (meaning they’re already approved for condo sales) in the local municipality can just go to the Bureau of Real Estate” to get final approvals.

When a rental building goes condo, generally existing tenants have the first right to purchase their units at the public price. If they don’t want to buy, they finish out their leases, which can then be terminated by the developer. There’s also turnover in the normal course of affairs.

Harder to get a loan

“We gain vacancies through natural attrition as renters move out,” Reynolds said. “We then refurbish the units with new finishes and put them out for sale so part of the building is leased, part is owner-occupied.”

However, that mixture can make it harder to get a home loan. In today’s stricter climate, lenders often require a minimum percentage of owner-occupied units before they’ll issue mortgages in a condo complex.

“It’s much more difficult to get Fannie Mae approval when you’re converting a building,” Mark said. The agency requires condo conversions to pre-sell 70 percent of units to owner-occupants before it will back mortgages, he said, but sometimes agrees to reduce that requirement a degree.

The apartment-to-condo trajectory is less likely to happen in San Francisco, where about 8,000 rental units are under construction. That’s because most were financed in a way that requires they generate rental income for many years, Zeger said.

Carolyn Said is a San Francisco Chronicle staff writer. E-mail: csaid@sfchronicle.com Twitter: @csaid

Article source: http://www.sfgate.com/realestate/article/Bay-Area-rental-pendulum-swings-to-condos-4740789.php

America’s Cup sends rentals into the stratosphere

Fri, 12 Jul 2013 08:52:36 +0000

Would you pay $18K a month to rent this place, because it has a view of the Bay and thus the race action?

Share this gallery: 1 of 11

The home, perched atop Clarendon Heights, is one of many being marketed as a temporary rental specifically suited for fans of America’s Cup, and is actually the least expensive example we’ll offer today. Per its write up through Trulia, this is a 3 bed, 2 bath, “available June 15th through August 15th.” For the weekly rental price of $5,000, up to 12 people could share the home, which includes “sweeping views of the Ocean, Golden Gate Bridge, North and East Bay” plus two-car garage, patio, and utility costs (as long as they don’t exceed $250 a month, which if 12 people actually stay there, is possible).

$18K a month is a bargain, going by this next example:

Share this gallery: 1 of 9

A relatively unremarkable loft-style condo of 2 beds, 2 baths, this 2,300 square foot unit is advertised as follows: “Available July-Sept 2013. Sleeping 6 comfortably, look no further for a conveniently located place to stay for the upcoming America’s Cup races.” The views aren’t featured (we can’t tell if there is one) but the fact that it’s walkable to the Embarcadero is. For that, you’ll pay $25K a month (that includes utilities and cable, plus one car parking).

Moving still higher on the monthly rent, we land at this home somewhere on Francisco Street with a view of the action from its roof deck.

Share this gallery: 1 of 8

With 6 beds and 4.5 baths and a Marina District address, this condo asks $30K a month. Advertising on Trulia promises: “the master suite features a private deck, and there is a rooftop deck with extensive views of the Golden Gate Bridge, Alcatraz… and full view of the Americas Cup Events this summer.”

Is America’s Cup fever really this hot?

Can homes close to, or with a view of, the fabled race really command prices like these? The comments await.

Anna Marie Erwert writes from both the renter and new buyer perspective, having (finally) achieved both statuses. She focuses on national real estate trends, specializing in the San Francisco Bay Area and Pacific Northwest. Follow Anna on Twitter: @AnnaMarieErwert

Article source: http://blog.sfgate.com/ontheblock/2013/07/11/americas-cup-sends-rentals-into-the-stratosphere/

SF’s Ritz-Carlton could fetch $168 million in sale

Wed, 14 Mar 2012 03:45:00 +0000

Trophy property alert: The Ritz-Carlton in San Francisco may be coming up for sale. But it won’t be cheap.

If, as expected by market pros, the 336-room luxury hotel north of Union Square is listed in coming weeks, it could fetch $168 million – or $500,000 a room, according to trade publication Real Estate Alert.

What could be making market watchers quiver with anticipation is a recent earnings call by the current owner, Host Hotels Resorts. CEO Edward Walter said the real estate investment trust is considering selling hotels whose market value has recovered from the depths of the recession, “so that we can feel comfortable that we’re not leaving a material amount of value on the table by selling in 2012.”

As we noted last week, the San Francisco hotel market has rebounded, with some of the biggest price increases in the country in 2011, and it’s likely to get even hotter in 2012. The $168 million figure comes close to the $172 million the Westin San Francisco - which has twice as many rooms as the Ritz-Carlton – went for last year.

Host Hotels, which owns six other hotels in the Bay Area, did not return a call requesting comment Monday. The REIT, headquartered in Bethesda, Md., controls in whole or part about 72,000 rooms in the United States and overseas. It recorded $1.66 billion in revenue last year.

So, why would Host Hotels let go of its San Francisco trophy?

“They are looking to capitalize on opportunistic values, such as the other ones we’re seeing in San Francisco,” said Alan Reay, president of Atlas Hospitality Group, an industry research and consultancy company in Irvine. “By selling the Ritz-Carlton here, they could deploy capital in markets where they see better buying opportunities.”

Dry hole: As of next month, San Francisco will be without a Gordon Biersch Brewery Restaurant for the foreseeable future.

Closing time is April 28 when its lease, at the Hills Plaza complex on the Embarcadero, is up.

“We couldn’t come to an agreement with the landlord,” said Carrie Kleban, chief marketing officer of CraftWorks Restaurants and Breweries, which owns Gordon Biersch. The landlord, Morgan Stanley, bought Hills Plaza from Shorenstein Properties for $198 million in 2004.

CraftWorks, headquartered in Tennessee, is looking for another spot in San Francisco, preferably close to the Hills Bros. Coffee building where the brew pub has operated for the past 20 years. “We’re working fast and furiously, but it may take a little time,” Kleban said.

It’s also looking to relocate the approximately 80 employees, some of whom will go to the two other Bay Area Gordon Biersch Breweries, in Palo Alto and San Jose. Others will be getting “transition” assistance from an agency affiliated with the California Employment Development Department.

Founded in the Bay Area in 1988, Gordon Biersch has 35 outlets in the United States and Asia. How long should San Franciscans wait for it to return to San Francisco? “We love San Francisco, but it’s all about real estate availability,” Kleban said.

And, presumably, the rent.

Compare and contrast: The Hills Bros. Coffee building, which dates to 1926, is No. 157 on San Francisco’s list of historical landmarks. As part of its campaign to resist moving now that its lease is up, the Gold Dust Lounge, which opened in 1966 on Powell Street, is attempting to be included in that august company.

It probably shouldn’t count on the San Francisco Chamber of Commerce as one of its supporters.

In a letter to the city’s Historic Preservation Commission, the chamber said the Gold Dust’s request “is an attempt to politicize a simple landlord-tenant relationship. The Gold Dust Lounge has known for years that their lease would be coming to an end and are clearly applying to the Commission as a last ditch effort to stall an eviction process that has been a long time coming. Approving this would be a true misuse of the term ‘landmark’ in San Francisco.”

Oh, and as reported in today’s Metro section, Handlery Hotels, the owners of the building that houses the Gold Dust, filed an unlawful detainer suit against the bar’s proprietors for failing to vacate the premises by Saturday, as called for in the lease.

New life from north of the border: As of today, Canadian life sciences companies have a home at San Francisco’s biotech hub in Mission Bay.

Four Canadian companies will be setting up shop at the Canadian Technology Accelerator on UCSF’s Mission Bay campus. Three are based in Vancouver: Aquinox Pharmaceuticals, which focuses on small molecule therapeutics; BioMark, which specializes in portable screening devices to detect cancers; and Precision NanoSystems, which has come up with ways to deliver drugs intravenously using nanotechnology. The fourth, Clinisys, headquartered in Edmonton, Alberta, develops digital medical record systems.

Canadian ambassador Gary Doer will be on hand with Mayor Ed Lee to open the incubator at UCSF’s California Institute for Quantitative Biosciences (QB3). “This partnership marries Canada’s world-class basic research institutions and life sciences companies with QB3′s proven expertise in translating science to commercial success,” said Doer.

“Faster commercialization means greater ROI, and that means greater success for both our economies.”

Blogging at www.sfgate.com/columns/bottomline. Facebook: sfg.ly/doACKM. Twitter: @andrewsross. bottomline@sfchronicle.com

This article appeared on page D – 1 of the San Francisco Chronicle

Article source: http://www.sfgate.com/cgi-bin/article.cgi?f=/c/a/2012/03/13/BU6T1NJGVV.DTL