Bayview-Hunters Point in San Francisco’s southeastern portion has long been a gritty working-class community physically isolated from the rest of the city and historically lacking access to the kinds of goods and services typically found in other neighborhoods. But real estate experts say the neighborhood will soon offer good investment and living opportunities.
Bayview will be “an extremely good place to invest in the near future,” said Patrick Carlisle, chief market analyst for the San Francisco-based real estate company Paragon. “The appreciation there will outpace, perhaps dramatically, what we will see in the rest of the city in the next handful of years.”
Carlisle and others in the industry are keen on Bayview because of the new developments planned or under way in the district, including a $1 billion mixed-use project at Candlestick Point by a joint venture partnership of Miami-based homebuilder Lennar Corp. and Santa Monica-based shopping center developer Macerich.
With this and other projects, Bayview is poised to be San Francisco’s next development hot spot, even as South of Market and Mission Bay continue their transformations. But while development will increase values in Bayview, the area is expected to remain a much more affordable place to live and invest compared to those other ultra-competitive markets in the city.
“There are very little development opportunities elsewhere in the city,” said Anton Qiu, principal with Northern California-based real estate brokerage TRI Commercial. “The price point is high everywhere else, and all the other areas like Mission Bay are spoken for. So the next frontier is toward Candlestick Point.”
Playing the role of pioneer in this frontier is Lennar, which is working on three projects in the district, including its plan with real estate investment trust Macerich to develop a 500,000-square-foot urban retail center at Candlestick Point. The outlet, slated to open in 2017, will be accompanied by more than 6,000 homes. The project’s total investment—including infrastructure such as water and sewer systems, streets and lighting—will be more than $1 billion over the next four years.
The project will launch with the demolition of the San Francisco 49ers’ former football stadium Candlestick Park in early 2015. This will make way for a wide array of offerings—including small and large retailers, an African diaspora-themed marketplace, movie theaters, a hotel, and rental and for-sale homes.
Lennar and Macerich officials did not respond to The Registry’s requests for comment. But Kofi Bonner, president of Lennar’s San Francisco division, said in a news release that the project “will create one of the Bay Area’s great destinations.”
Randy Brant, executive vice president of real estate for Macerich, described Candlestick Point as a prime location for development in a booming regional economy. “We fully expect that the Candlestick Point project will be a magnet for economic activity and community-building,” Brant said in the release.
Just north of Candlestick Point, Lennar’s The Shipyard development also is going up, featuring 6,000 homes, 3 million square feet of office and commercial space and more than 230 acres of parks and open land. Lennar also is preparing to renovate the nearby 256-unit Alice Griffith affordable-housing complex.
Qiu believes the projects in Bayview will help address the city’s housing crunch. As the infrastructure and other components are built, he said, the area will offer families and workers in various industries an opportunity to live in the city at a relatively affordable price. This will help the city achieve “a more balanced, more diverse economy,” Qiu said.
To be sure, “these developments will have a big impact on the neighborhood, putting upward pressure on home values,” Carlisle said. “It will create a whole new dynamic.”
But prices in Bayview will still be much lower than in neighborhoods like SoMa or Hayes Valley, Carlisle said. For instance, the new condominiums at The Shipyard are fetching $600 to $700 per square foot whereas those in SoMa or Hayes Valley are starting at about $1,000 per square foot.
Another way of looking at it is a two-bedroom condo at The Shipyard is selling in the $500,000 to $600,000 range—well below the city’s median price of $1.1 million for the same type of unit, according to Carlisle.
As the Candlestick Point project progresses and the city in general fills in, industry experts say, the new condos in Bayview will appreciate in value in the coming years.
According to a recent report by Paragon, Bayview has shown the largest home-price appreciation among San Francisco neighborhoods since the market bottomed in 2010-11.
Bayview is up 75 percent, followed by the Inner Mission at 63 percent and Bernal Heights at 57 percent, according to the report. However, prices in Bayview are still 12 percent below their market peak in 2006.
“Due to subprime lending, Bayview’s bubble was so big its market crashed terribly when it popped,” the report said. “During the downturn, its housing market became dominated by distressed sales, and it fell so far that now, with the disappearance of the subprime effect, its recovery has been equally dramatic. But because its bubble was so large, it is still below its 2006 peak value.”
The report also noted that the markets in Bayview and its surroundings “are quite strong because they contain the most affordable houses in the city.”
With new developments coming in, the report added, “values in this area may well continue to outpace the city by a good margin.”