New York-based real estate developer Millennium Partners is targeting a summer groundbreaking for its latest upscale residential project in San Francisco just as the city’s market for luxury condominiums is boiling over.
Millennium aims to begin construction on a $500 million condo high-rise at 706 Mission St. in July with sights on a 2018 opening. The South of Market development would include the restoration of the adjacent historic Aronson Building and house the long-awaited Mexican Museum.[contextly_sidebar id=”xQAzACO5uQQ9k1GUCCacBuxm4y919Jsk”]The 45-story building would “feature up to 190 of the most exclusive residences in San Francisco, creating a residential experience deeply rooted in the local arts and culture like nothing the city has seen before,” according to Millennium’s Web site.
The project comes at a time when high-end condo living in San Francisco is in strong demand even as prices have reached a historic milestone.
During the first quarter of 2015, the average price for all condo sales in the city hit $1,000 per square foot “for the first time ever,” said Patrick Carlisle, chief market analyst of San Francisco-based Paragon Real Estate Group. “That’s a stupendous price.”
What’s more, Carlisle said, “the new condos are pulling the average up, and they’re already selling at over $1,000 a square foot.”
He expects the units at the new Millennium high-rise to be easily in that price range. If the Lumina condos are selling at $1,400 to $1,500 a square foot now, he said, 706 Mission will fetch at least that much by the time it opens.
Currently under construction, Lumina is another luxury residential tower in SoMa. New York-based Tishman Speyer in partnership with Chinese developer China Vanke is behind this project at Main and Folsom streets.
“Almost all the new condo construction is at the luxury end,” Carlisle said.
Many of the buyers of these units are affluent and already have a home in the Bay Area but are looking for a second residence in a vibrant urban setting, he said. “They want condos that are fully serviced” with a valet, security and other top-of-the-line amenities.
But as more and more of these condos are built, he said, “the question becomes: Will we hit a saturation point? How many luxury condo buyers are out there? We won’t know until two or three years out when the Luminas and Millenniums come on the market.”
For now, he said, these types of condos are being “snapped up left and right. It’s a feeding frenzy.”
Alan Mark, president of the San Francisco-based urban residential marketing firm The Mark Company, had a similar take on the city’s condo market: “Low inventory levels continue to play a major role in San Francisco, pushing prices upward in the traditionally busy spring months. Despite the addition of more than 1,600 units in 2014, there are now only 660 units available in the currently selling inventory for new construction condominiums.”
Mark added: “As the technology industry continues to gain momentum in markets like San Francisco, an increasingly younger demographic is buying homes and no longer priced out by older generations. While the demand for more compact units has increased as they tend to be a more affordable option, there is still ample market for the largest and most desirable units in the building. Amero (a condo project by San Francisco-based Trumark Urban in the sought-after Cow Hollow neighborhood) broke $2,000-plus per square foot for its larger, view residences.”
706 Mission, designed by Handel Architects, would be in that similar vein, offering larger units than the average condos in comparable towers. The project would be Millennium’s third deluxe high-rise in the city, following the Four Seasons Hotel and Residences at 757 Market St. and Millennium Tower at 301 Mission.
Setting itself apart from other luxury residential projects, 706 Mission would incorporate The Mexican Museum, which celebrates Latino art and culture and is currently at Fort Mason Center.
“We think the combination of an exciting downtown location and the incredible cultural offerings in Yerba Buena will make this a very attractive place to live. The Mexican Museum will contribute to that dynamic atmosphere tremendously,” said PJ Johnston, spokesman for Millennium Partners. “We’re building bigger units that will attract families—folks who want to live here full time, who want to join the fabric of this still emerging neighborhood.”
“We have worked over 20 years for this,” museum board Chairman Andrew Kluger said.
The museum’s new location would offer a site that’s seven times bigger than the one at Fort Mason Center, Kluger said. At 706 Mission, the museum would occupy the first four floors of the development, totaling 52,000 square feet.
Millennium is contributing $30 million to the museum part of the project, he said. The museum is putting in another $30 million.
The overall project is still facing legal opposition from, interestingly enough, a group of residents from Millennium’s nearby Four Seasons, who are known as the Friends of Yerba Buena. The group filed two lawsuits contending that Millennium’s new project violated state environmental study and city planning requirements. Courts have ruled against the group, which is appealing.
Despite the lingering court battle, Kluger remains confident the development will go forward as planned with the museum opening at its new home in spring 2018.
“We are moving ahead fully without really concerning ourselves with future legal challenges,” Kluger said.
Rendering courtesy of Handel Architects