By Jon Peterson
San Francisco-based Axis Development Group is the new owner of the apartment development site located at 2675 Folsom in San Francisco, according to sources familiar with the transaction. The purchase price was $18 million.
The property was sold by John Dutro, an individual owner of the property, and two brokerage firms were involved representing the seller. One was led by Michael Thomas, a vice president in the San Francisco office of CBRE and the other by Dave Noravian, founder of San Francisco-based Beckett Capital.
“The sales price on the site comes out to be at $155,000 per unit, which I think is a fair price given that this was an un-entitled site. We have seen entitled apartment sites in San Francisco being priced for as much as $300,000 per unit,” says Michael Thomas.
This project is located within the Mission District sub-market in San Francisco, and the new owners are planning a potential start date for the project somewhere in the 12- to 15-month time period from now. There is no guarantee that the new project will be developed given the current atmosphere surrounding housing developments in that neighborhood. A group calling itself the Committee to Save the Mission has successfully placed the issue on the ballot for this November’s elections in San Francisco. Their success could impose a moratorium on new apartment developments in the Mission District.
Even without a moratorium, this sub-market in San Francisco remains a very tight market for apartments. Vacancy for apartments in the Mission District is in the range of 2 percent to three percent, according to sources that track this information.
Axis is already pretty far along with getting the project entitled. It had filed a preliminary property assessment while it was going through the process of buying the site. The plans for the development are to build 115 apartment units on the site. The vast majority of the units are planned to be market rate units; the submitted plans for the project call for it to have 12 percent of the units being affordable, although the final figure is a moving target, according to the plans.
One of the attractions of the project is its proximity to BART. “The site is within a four block walk to the BART station located at 24th and Mission. This will make it a draw for renters who need public transportation for work purposes or other needs,” said Thomas.
There will be some existing real estate on the site that needs to be demolished. “The site now has around 20,000 square feet of warehouse space. There are two tenants in this facility that have short term leases. This is a plus for the new owner as it gets them some income while they go through the approval process,” says Noravian.