[contextly_sidebar id=”W5r9ZABKUpt98IPgleq7Z2UqmZU5RMnl”]As we reported earlier, after reviewing the offering document, which The Registry was able to procure, it was evident that in this case timing was one of the main factors that played the role in this transaction.
Last month, the San Francisco Business Times reported that a partnership between the Rockpoint Group and Maximus Real Estate Partners was in the process of purchasing the 298-unit luxury residential tower at 401 Harrison Street. The public documents today confirm the sale closed on July 2nd, and the purchase price of $410 million. At that amount, the two firms paid roughly $1.375 million per unit.
The rental building has already applied to convert the rental units into condos. If the new owners are successful in the conversion, they will have the only offering of scale to close condo sales for the remainder of 2015. Most new condo development projects are still in planning phases expecting delivery in 2017 and beyond. Tishman Speyer’s Lumina project is perhaps the only competitive offering in the very active Transbay neighborhood, however, those units are still under construction, whereas Rincon Hill’s are ready for move in.
According to a recent, San Francisco Condominium Market Report for July 2015 from Polaris Pacific, the average price per square foot for condos in buildings over 13 floors is $1,282, which represents a 14.6 percent change year over year across the entire city. In district 9, where this building is located, that annual change climbed 22.2 percent over the same time period. For the fourth month in a row, the median price has surpassed the $1,000,000 mark, according to the same report.
Over the last several decades, San Francisco has struggled to fulfill its housing needs, which is not news to anyone tracking the housing market in the Bay Area. The offering document gave an insight into that, as well stating that since 1990, San Francisco’s occupancy has never dipped below 95 percent, with an average occupancy of 96.7 percent from 1990 through 2014.
The months of remaining inventory figure, or MRI, indicates how many months it would take to absorb current supply. Six months is considered a balanced market, while nine months or more is considered an oversupplied market. The MRI figure has remained below the six-month benchmark since 2012. The most recent figure was 2 months, a 13 percent decrease from the prior year, according to Pacific Polaris.
The neighborhood, the amenities that include a sky lounge and clear, unobstructed views of the bay and surrounding neighborhoods and the timing of this sale could make the Rincon Hill purchase pay out nicely for the buyers.
Jeff Weber, senior managing director, Steven Van Dusen, managing director, Jason Flynn, managing director, along with Kara Wiard, Joseph Angiuli and Eve Myers from Eastdil Secured represented the seller, Principal Real Estate Investors.