By Meghan Hall
No matter which way you slice it, San Francisco’s housing market is tight, and while some of the city’s neighborhoods have seen an explosion of development, others have remained largely unchanged. Those at DM Development, a real estate and investment firm, jumped at the opportunity to redevelop an available parcel at 1515 Union Street, located within proximity to several of San Francisco’s most exclusive neighborhoods. Upon completion this year, the project — titled Union House — will bring 41 condominium units to market in a portion of San Francisco that has seen very few new residential developments over the last economic cycle.
“This project is pretty well located at the nexus of four of the most coveted neighborhoods in San Francisco: Pacific Heights, Russian Hill, Cow Hollow and the Marina,” explained DM Development’s Co-Founder and Chief Executive Officer, Mark MacDonald. “Historically, it has been one of the most desirable locations to live in San Francisco…I think, at 41 units, Union House will be one of the largest developments at this location in decades, and that is what we were really excited about, and that is what made it such a unique and rare development opportunity for us.”
DM Development purchased the property, formerly home to a Chevron gas station, for about $10 million in 2016, according to public documents. The site, which is about 13,700 square feet, was a rare commercial lot ripe for redevelopment in a neighborhood that had seen little new construction due to the history of its homes and well-established character. The decision to pursue for-sale product as opposed to rentals, was further spurred by market dynamics and supply and demand imbalances.
“The San Francisco housing market is chronically undersupplied; there have been a lot fewer condos than apartments delivered in the latest cycle, and just very little housing in general built in the Northwest neighborhoods in the city,” said MacDonald. “…The Northwest [portion] is where some of the oldest residential neighborhoods are in San Francisco, and there are very few open spaces and commercial lots for redevelopment. If there were more opportunities like this there would be more developments here because demand is so pent-up and strong.”
Additionally, noted MacDonald, the decision by many developers to pursue for-rent product after the Great Recession put further supply constraints on for-sale development.
“I think that a lot of developers were perhaps gun-shy after the last housing downturn and pivoted away from for-sale and started doing for-rent. And as well, I think the capital markets were more receptive to doing for-rent product as opposed to for-sale,” he said.
Upon completion, Union House will feature one, two- and three-bedroom units, including penthouse suites. Pricing for the residences starts at $1.25 million, and DM Development announced that sales on the homes, which have generated a great deal of interest, began at the end of February.
The seven-story community is designed by Handel Architecture, and its design is inspired not just by the surrounding neighborhoods, but by high-end boutique hotels in Europe as well as the historic storefronts that make up Union Square.
“At a high level, the overall design aesthetic of Union House—both the exterior architecture and the interior design—is quite unique in that we are trying to combine heritage with modernity, where we marry some of the most beautiful design details from an earlier era that we have picked up from the neighborhood with modern styling and finishes of the highest quality,” said MacDonald. “It has a wonderful European or Park Avenue feel, with so many rich elegant details, many of which are very different from the newer, modern buildings in San Francisco.”
Some of those details include oversized picture frame windows with views of the Marin Headlands, Golden Gate Bridge and San Francisco, European wide-plank oak flooring, free-standing tubs, polished nickel finishes and Italian Calacatta marble. The exterior of the building will be clad in a stone-panel-and-bronze façade.
A double-height lobby will feature inlaid Portuguese limestone flooring and eucalyptus wood walls, marble fireplace and seated parlor. The property will also feature 2,900 square feet of ground floor retail space and a rooftop Sky Lounge for residents that feature additional views.
The project is not DM Development’s first in San Francisco; the developer has also an array of projects, including 450 Hayes, 8 Octavia and 2290 Third. While Union House is slightly different in style and perhaps a little less “avant-garde” than DM Development’s projects elsewhere, the firm’s approach to the property was the same.
“At DM Development, we always want the buildings to be of their time and place,” said MacDonald. “We want them to be very contextual.”