The links are ours; the words are from a plugged-in tipster:
First, you are right on, they have sold 12 units with the last two sales coming in the last few weeks. What is not public knowledge, however, is that five of those sales are units that have been, as your site pointed out earlier, retained for investment purposes but marked as sold for marketing purposes.
So they have sold seven units in six months, and that was before all the news of the market going south and before 200 units come on-line at 170 off Third. Their new strategy is to aggressively lease up the back of the building. They are going floor by floor, starting at the bottom. They are also trying to lease the penthouses.
And if you’ve been plugging in, this new development shouldn’t catch you by surprise. If not, however, perhaps this will serve as a wake-up call (on a number of different levels).
The only wake-up call would be to the fact that if you build a so-so product in the middle of an area that, for 7 or so months out of the year (during baseball season), is an absolute zoo, you better not expect for the units to fly off the shelf when you’re charging premo-quality prices. It also certainly does not help that the newer developments that have received so much attention in the past few months are flat out better products than 188 King.
This is merely a case of the market putting the developer in check for what it has put out there.
why is this a “wake up call on a number of different levels” ??
[Editor’s Note: First and foremost, we like to think that it’s a wake-up call to “plug in” for the straight scoop. On a couple of other levels (for those who haven’t been “plugging in”): if you have purchased, or are considering a purchase in 188 King, this could be problematic (more on this tomorrow); if you’re trying to make sense of all the new developments, a reminder that “Sold” (or even “Phase II”) doesn’t necessarily mean that units are actually selling; for developers, the days of “if you build it they will buy it” are long gone; and for everyone else, a general reminder that all properties are not created equal.]
It’s seems like a lot of developers are being put “in check” for what they have put out there these days. And many of these projects seemed to be selling rather briskly just last year (Palms, Beacon, etc.)
Note to Ed. Firstly the “straight scoop” is really your scoop from your perspective. It is not definitive. The reality is that the market has spoken to 188 King. It is an overpriced product for a number of reasons and consequently 75% of that product has gone unsold. I think it is pretty obvious that those 7 owners are in a less than desirable situation in the midst of 35 renters. I think the buying public has a really good idea of what is going on and does not easily fall for the shenanigans of builders, brokers and the other usual suspects.
Anon: Not unlike any group of analysts, of course we have a perspective (and a voice). And no, it’s not definitive.
With regard to 188 King, however, please keep in mind that it was over two months ago that we first called attention to the struggling sales and “shenanigans” (i.e., the “straight scoop”). And yes, two months later it is now pretty obvious (and the market has spoken).
For the record, there’s a lot about 188 King that we like. And eighteen months ago, we honestly believe that the market would have spoken quite differently about the offering.
Thanks for “plugging in.”
“And eighteen months ago, we honestly believe that the market would have spoken quite differently about the offering.”
That is without a doubt the key sentence. The landscape has changed (no pun intended) in this part of SFO and as result the newest developer entrants into the market will hopefully push other developers to put out higher quality products than what they had been putting out. Although clearly the developer at Arterra doesn’t seem to care. But before I pass judgment on Arterra, I would need to know the price points. If they are significantly lower than the likes of Infinity, 1Rincon, etc., then maybe that quality/caliber of development would be justified.
188 King Street is an excellent example of really bad design. Lofts are all about space, these lofts feel squeezed. Perhaps they could be marketed as great lofts for short people. They will feel much bigger if you are under 6’2″ tall. I think that is the kitchen cieling clearance. There is no place in the loft to hide. For the asking price, I would want some private space. The could have been great if they were 15 feet wider. Then the catwalks would make sense and have drama.