Downtown San Francisco Luxury Apartment Tower Loses Half Its Value
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Re: Downtown San Francisco Luxury Apartment Tower Loses Half Its Value
#2An intuition I am open to being incorrect: I found NEMA ostentatious and overpriced even at the peak of Uber/Twitter hype (the offices of which form a NEMA sandwich). Second only to the condo building that tilted because its piles were driven too shallow, it does not surprise me that this building would "lose value" in a correction.
Re: Downtown San Francisco Luxury Apartment Tower Loses Half Its Value
#3Lost valuation, which is a distinct concept from value.
Re: Downtown San Francisco Luxury Apartment Tower Loses Half Its Value
#4An intuition I am open to being incorrect: I found NEMA ostentatious and overpriced even at the peak of Uber/Twitter hype (the offices of which form a NEMA sandwich). Second only to the condo building that tilted because its piles were driven too shallow, it does not surprise me that this building would "lose value" in a correction.
Correct. NEMA was always kind of ill-conceived.
Re: Downtown San Francisco Luxury Apartment Tower Loses Half Its Value
#5Lost valuation , which is a distinct concept from value.
Sure, but at 92% occupancy and a delinquent loan on the building with negative cash flows, the lower valuation removes the ability to sell and come out ahead. They're in a hole, digging deeper and the escape plan just collapsed in on them.
Re: Downtown San Francisco Luxury Apartment Tower Loses Half Its Value
#6Check out this building in SOMA, it was finished, sat empty waiting for permits for 2 years because the City sucks, and during that time the condo market crashed and so now the builder had to hand it back to the lender. Full brand new condo building one block from Oracle Park with like 24 luxury condos in it for 16 mil now:
https://sfstandard.com/2023/08/16/brand-new-san-francisco-co...
Re: Downtown San Francisco Luxury Apartment Tower Loses Half Its Value
#7An intuition I am open to being incorrect: I found NEMA ostentatious and overpriced even at the peak of Uber/Twitter hype (the offices of which form a NEMA sandwich). Second only to the condo building that tilted because its piles were driven too shallow, it does not surprise me that this building would "lose value" in a correction.
Correct. NEMA was always kind of ill-conceived.
Current vacancy rate is still less than 10%, so unsure what makes it ill-conceived. There is/was a lack of amenity-rich rentals targeted to young professional types in SF like you’d see in NYC and it fills a certain niche.
Main issue is rental market in SF is still soft so they can’t charge what they did pre-pandemic, and the location doesn’t help.
Re: Downtown San Francisco Luxury Apartment Tower Loses Half Its Value
#8Check out this building in SOMA, it was finished, sat empty waiting for permits for 2 years because the City sucks, and during that time the condo market crashed and so now the builder had to hand it back to the lender. Full brand new condo building one block from Oracle Park with like 24 luxury condos in it for 16 mil now: https://sfstandard.com/2023/08/16/brand-new-san-francisco-co...
By now I would think most builders can expect 1-2 years for obtaining permits. Not ideal, but it's similar in other large metros.
Re: Downtown San Francisco Luxury Apartment Tower Loses Half Its Value
#9When property like this goes underwater, it starts the clock for how long people can wait things out while staying solvent.
The exponential rise in property prices have helped people stay calm but I think there’s a lot more pain ahead.
Re: Downtown San Francisco Luxury Apartment Tower Loses Half Its Value
#10According to Zillow, rent in SF is about flat over the past year and a half, so it's not like all SF real estate across the board is getting twice as cheap.
I kinda like the NEMA building itself, but the location near Civic Center is right in the middle of the fentanylpocalypse. Of all the places to lose value, this one doesn't surprise me much.