Excessive-rises and excessive flyers: will luxurious property lead a restoration in San Francisco?

Giovanni Colella and his wife, son, parents and nanny will be among the first tenants to rent the Four Seasons Private Residences in downtown San Francisco this month. In the heart of the city, where spacious condominiums are scarce and outdoor space is unavailable even for the $ 46 million worth of penthouse listed nearby, their 4,600 square foot home is a marvel.

The Four Seasons consists of 146 private units stacked in two buildings: a new 45-story glass and steel tower built by Handel Architects and the 10-story Aronson building, a landmark that marks the earthquake of the The city survived in 1906. The Colellas’ unit is located on the roof of the Aronson with 1,000 m² of outdoor terraces, but the lush living space then protrudes into the tower and extends over both buildings.

Colella, a psychiatrist turned serial healthcare technology entrepreneur, with 256,000 followers on LinkedIn, and his wife Vanessa – Chief Innovation Officer at Citi – consider the home a “multigenerational village” in the heart of the city, just steps away from the Museum of Modern Art and the Yerba Buena Center for the Arts. The fact that both locations are closed due to Corona restrictions appears to him to be irrelevant in view of the long-term nature of the purchase.

“The city keeps coming back,” he says. “I love going to the opera, I love the symphony, and everything is right next door. . . Lake Tahoe wouldn’t do that for me. “

The Grand Penthouse in the Four Seasons Private Residences

At $ 12.6 million, their unit is the most expensive San Francisco condo sale since the pandemic began. Your purchase is a bet on the city’s resilience at a time when many are descending from California, even Elon Musk moving to Texas and magnate Larry Ellison now to Hawaii. As recently as last month, the New York Times reported that the tech crowd “can’t leave the Bay Area fast enough”.

According to Zillow, the pandemic exodus led to a glut of supply, with new listings in August increasing by 183 percent over the previous year. The California Association of Realtors said sales in May were down 51 percent year over year. By January, after 11 consecutive months of decline, rental rates in San Francisco were down 27 percent year-over-year, the largest drop in the United States, according to Apartment List.

However, it could already start to recover, led by the upper class. CAR data shows that home sales rose sharply again, up 40.2 percent in December, while home prices closed the year 16.4 percent higher. Data from Zillow suggests pending sales in the final week of 2020 rose 107 percent for the Bay Area and 117 percent for San Francisco alone.

In the first month of 2021, property sales in San Francisco were up a “whopping 67 percent” year over year, according to Compass, a real estate company. It adds, “The market seems to be warming up a lot faster than usual.”

“A story of two markets”

For Chris Glynn, Zillow’s senior economist, the trend is clear: “The early narratives about ‘cities die’ are way over the top,” he says.

Spurred on by low interest rates, a soaring stock market, and the biggest year for IPOs since the dot-com bubble, luxury homes are leading a real estate recovery in San Francisco. CAR calls it “a story of two markets”.

The rebound has exposed inequality: sales of homes priced below $ 300,000 have declined but increased 85 percent for those over $ 2 million © Bloomberg

Gregg Lynn, a high-rise real estate agent at Sotheby’s, says the market turned in no time on the first weekend of November when the electoral college convened for Biden and Pfizer announced that its Covid-19 vaccine was 90 percent effective.

“These two big question marks about the future – leadership of the country, unknowns about Covid – were resolved within 24 hours,” he says. “On that day, the energy changed when buying condominiums in San Francisco.”

While 2020 was marked by a global pandemic sweeping across the world, destroying businesses and jobs, and causing masses of people to flee cities to move into larger homes in rural areas with more spacious “zoom spaces”, the The ultra-rich often thrived in isolation.

“There has never been so much wealth in the upper class,” says Joel Goodrich, a San Francisco luxury realtor with Coldwell Banker. “We had more than $ 10 million and over $ 20 million in revenue in 2020 than in 2019.” . Personally, I had the second best year of my real estate career. “

Goodrich says demand from international buyers has stalled due to the difficulty of seeing premium properties on a webcam. The void was filled by shoppers from across the US who view the effects of Covid-19 as temporary and see the less competitive shopping environment as a rare opportunity.

“In the last few weeks alone, in the range of $ 20 million to $ 30 million. . . We saw buyers from New York, LA, Boston and Canada, ”said Goodrich, who brokered the 2017 $ 17.8 million sale of the Bel Air property owned by Kim Kardashian and Kanye West. “Because in San Francisco, Silicon Valley, people still need a presence despite everything – we will remain the tech capital of the world.”

The “Manhattanization” of San Francisco has made critics lament that the soul of San Francisco is being robbed in favor of skyscrapers © Bloomberg

For some, the rebound feels like a justification. The San Francisco Chronicle recently documented the “cycle of change, rebirth, and chirp” from the end of the gold rush in the 1850s to the 1906 earthquake, the violent 1970s, and the dot-com bubble in the early 2000s.

For others, it simply underscores a wider shift in inequality in California, where real estate trends are as K-shaped as the economy is capitalized.

CAR data shows that while rents have declined and sales of homes priced less than $ 300,000 fell by a fifth in December, those priced above $ 2 million rose 85 percent are. The higher the price range, the stronger the profits: for the top 5 percent of homes, prices rose by 26.5 percent at the end of the year. The median price rose 16.8 percent to a record high of $ 718,000.

San Francisco’s “Manhattanization”

A look from the Four Seasons Private Residences, where prices start at $ 2 million

Though “Manhattanization” is a bit of an exaggeration – San Francisco has only 26 buildings over 150 meters tall compared to 290 in New York City – the influx of the affluent has moved a subdued downtown area to a vibrant center with an elegant waterfront and an abundance of Museums transformed. says Glenn Rescalvo, a native of San Francisco and principal architect for the Four Seasons project at 706 Mission Street.

The trend has drawn many critics who complain that the soul of San Francisco is being shed in favor of ultra-modern skyscrapers like the Mira Tower with its angled bay windows. Over the decades, voters have endorsed initiatives to limit building heights in the city center, and a new “CEO tax” was passed in November to impose bonuses on executives who earn more than 100 times the average company wage.

Rescalvo says the city is right to encourage the boom. “We not only need affordable housing, we need middle-income apartments and we need luxury apartments,” he says. “We have to take care of the entire food chain so that everyone has a place to live.”

His vision for the Four Seasons, he says, was to recreate the best qualities from the more affluent neighborhoods of San Francisco in one column.

“Imagine taking a Pacific Heights home with you, bringing it to downtown San Francisco, and then stacking it vertically,” he says. “It creates this much more intimate, luxurious, elegant, and sophisticated environment.”

“Covid is temporary”

Although the residence is not physically connected to the nearby Four Seasons Hotel, management wants the owners to feel like hotel guests with a variety of premium services. Maria Di Grande from MDG Art Advisory is on hand to curate art, while Napa Valley’s “Tastemaker” Kerrin Laz – Dean & Deluca’s wine director prior to privatization – helps find the perfect Pinot Noir.

“That idea of ​​experiences or events that no one can attend, that are unique and curated for a group – that’s all we do,” says Laz.

The gym has an array of upscale treadmills, rowing machines, and free weights, as well as the ability to swing kettlebells alongside NBA All-Star Steph Curry, who bought a $ 8 million home here last year.

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Units start at $ 2 million; the most expensive is the two-story Grand Penthouse, which is on sale for $ 49 million – a record condominium listing for the city. The device is unfinished on the assumption that every buyer will want to customize every detail.

Sotheby’s Lynn says the pandemic has opened up opportunities for wealthy buyers who think long-term. Says his clientele, “I have to wear a mask and touch common surfaces in an elevator, and I may not be able to use the amenities for a few months. I’m asking for a discount. ”And it worked. Some condo buyers, he says, got 15-20 percent discounts in some neighborhoods.

“Covid is temporary. It changed the energy in the city for a year or 18 months, ”he says. But the attraction of San Francisco won’t go away. “The best apartments will be gone in five years.”

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