Exclusive: Here’s how much San Francisco’s tallest condos will cost
Source: San Francisco Business Times
When Jay Paul Co.’s 181 Fremont opens next year, the 802-foot mixed-use tower will include the tallest condo project in San Francisco, and its pricing is also set to hit a new benchmark.
Residential sales for eight of the $665 million building’s 55 condos begin on Tuesday, and two-bedroom units will start at around 1,200 square feet, priced in the low $3 millions. Three-bedroom units will be in the mid-$6 millions. Overall, prices will range from around $2,400 per square foot to $4,500 per square foot, said Dilan Uran, director of sales at 181 Fremont, making it one of the most expensive residential projects in the country.
In April, San Francisco’s average price per square foot for new condo construction was $1,303 per square foot, up 2 percent from the previous year, according to the Mark Co., which is also 181 Fremont’s sales brokerage.
The building’s largest unit, the 7,000-square-foot penthouse on the 70th floor, doesn’t currently have a price, but could potentially be the most expensive individual condo ever sold in the city. Tishman Speyer’s Lumina project was asking $49 million for its two-floor penthouse, the most expensive price for a single residence in San Francisco, but no buyer has been found and the developer may choose to sell the unit in separate pieces.
The tower, rising in San Francisco’s Transbay neighborhood, will have 55 condos, all with different floor plans as the building tapers to its spire. Owners having the option to purchase 12 accessory suites to be occupied by guests or used for a home office, for a total of 67 units in the project. The condo portion starts 520 feet above the ground, atop around 435,000 square feet of Class A office space.
The project is a big bet by Jay Paul Co. on the continued vitality of the neighborhood and strong demand in the luxury residential sector. It joins a slate of new highrises that are transforming the city’s Transbay District. Jay Paul Co. is based in San Francisco, but this is the developer’s first project in the city.
The developer hired Orlando Diaz-Azcuy to design the interior of each unit, with custom-made marble walls and golden door handles from Europe. A 52nd-floor amenity space will also have a terrace, gym, lounges and kitchen. A model unit that reflects the design is opening on Tuesday in a sales center at nearby 101 California St., which is meant to show the experience of living in the tower to buyers before the actual building is completed next summer.
Alan Mark, president of the Mark Co., noted that San Francisco is still lacking new high-end housing supply, particularly condos. “I do not think we will have more than 1,500 new for-sale units through the end of this decade,” said Mark.
And San Francisco, despite its soaring home prices, is also still seen as a bargain for international condo buyers compared to New York, London and Hong Kong.
Mark said that he has talked to potential buyers who include existing owners in the neighborhood who want newer product, as well as international buyers who frequently visit San Francisco. He expects demand to be strong for the project.
Jay Paul Co. has spent decades in Silicon Valley building offices for tech giants such as Google Inc. (NASDAQ: GOOG), Apple Inc. (NASDAQ: AAPL) and Amazon.com Inc. (NASDAQ: AMZN). The developer has its offices in the city and many executives live there, but it took years to find a project that it wanted.
At the end of 2012, the developer beat around five other groups for the fully approved site at 181 Fremont, buying it from SKS for $71 million.
“The market was just starting to heat up at that point,” said Matthew Lituchy, chief investment officer of Jay Paul Co. “One of the appealing things was that it was really shovel ready.”
The land deal closed in March 2013 and the project broke ground in November. Jay Paul Co. made some changes, including a deeper foundation and moving a mechanical floor from the upper levels, which freed up two more floors for residential space. Workers dug almost 300 feet to bedrock, which took over a year, and then the tower began rising, now adding multiple floors per week. Glass is now being installed at the base of the building. Heller Manus Architects designed the tower. Level 10 Construction is the general contractor.
The project paid the city around $64 million in fees, including an affordable housing fee of almost $14 million under the city’s inclusionary housing requirement. In 2014, Jay Paul Co. secured a $480 million construction loan from Starwood Property Trust for the project. HFF was the broker on the financing.
The relatively compact 15,000-square-foot site was challenging to build on, amid one of the busiest streets in the city, said Lituchy. It’s a block from the Bay Bridge, and within one of the busiest construction zones in the country. Boston Properties and Hines’ Salesforce Tower is rising next door, and the Transbay Transit Center is being built adjacent to 181 Fremont, which will have direct access to the Transit Center’s park, once it’s completed.
Unlike many new residential projects, 181 Fremont won’t have a branded name, just its address. The developer and marketing team considered other names, but the address resonated with brokers and wouldn’t be confused with other projects with potentially similar names. “We just wanted to simplify it,” said Lituchy. “You immediately know where it is.”
The project has no office tenants. Although there have been signs of slowdown in the office market, with more sublease space and leases falling apart during late negotiations, Lituchy is confident with the developer’s long-term hold perspective. “This has always been a cyclical market. We’re very comfortable taking that cyclical risk,” said Lituchy.
“It’s still a very tight market, and it’s still very difficult to build here,” he added, noting that it took six years for 181 Fremont to get approvals. “We think that long-term, this is a really good place to do business.”
The developer and its broker Newmark Cornish & Carey is now in talks with potential office tenants.
181 Fremont’s status as the city’s tallest residential tower may eventually be surpassed by Oceanwide Center at First and Mission, which is seeking a 905-foot height in its taller tower. But 181 Fremont will be the tallest next year when it opens and for at least three years, based on Oceanwide Center’s projected late 2019 opening.
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