First and Folsom

From JK Dineen at the San Francisco Business Times:

“The San Francisco Redevelopment Agency is seeking a developer to tackle a prime 600-unit residential project at First and Folsom streets, the first step in a planned 2,600-unit highrise Transbay District the city is counting on to help pay for a new Transbay rail and bus terminal.

On Sept. 8, the agency will issue a request for proposals for Block 8, one of a dozen state-owned lots freed up when the elevated Embarcadero Freeway was knocked down after the 1989 Loma Prieta earthquake. While nine of the 12 parcels are set to be eventually redeveloped with housing — two will be parks and one a 700,000-square-foot office tower — Block 8 is the boldest. It calls for a 550-foot tower reaching above two mid-rise affordable apartment buildings and a row of townhouses that will open onto Folsom Street, a thoroughfare that will eventually be reconfigured as a retail mecca with wide sidewalks, greenery and outdoor seating.

“It’s a tough deal for a whole bunch of reasons,” said Tony Crossley, a broker with Colliers International who has brokered a number of land deals in the area. “Construction costs are very high, condo prices and the rate of absorption are off and then you roll in the increased affordability (probably around 25 percent) and you really have to do some hard math.”

Wait a second, condo prices are off?

UPDATE: Our apologies in advance, but the proverbial wheels have come off the comment bus (and apparently we’re to blame). We’ll get them back on soon.

54 thoughts on “In The Pipeline For First And Folsom: 550-feet And 600 Units”
  1. Wait a second, condo prices and the rate of absorption are off?
    The cynicism of this website is getting off the charts. If the apocalypse happened I think Socketsite would be jumping up and down waving pom poms.
    [Editor’s Note: Nope. But readers should be challenging industry reports of a “strong” SoMa market (as demonstrated by an up tick in recorded sales and average sales price).]

  2. Any quotes from Mike Grisso of the Redevelopment Agency in that article? I’m under the impression that the tower will be 100% market rate, with the BMR rental apartments contained in the other townhomes and such on the site.

  3. [Editor’s Note: Nope. But readers should be challenging industry reports of a “strong” SoMa market (as demonstrated by an up tick in recorded sales and average sales price).]
    I’m more referring to the tone and snark, which is laced with a whole lot of schadenfreude and negative cheerleading. I love the info on this site, not so much the attitude. Maybe that’s just me.
    [Editor’s Note: Sorry to disappoint, but no schadenfreude or negative cheerleading over here. Snarkiness? Sometimes. A willingness to challenge conventional (or industry) wisdom? Always (especially when it comes to the numbers).]

  4. Challenge any report of anything positive. If the report is negative it is irrefutable. So says the editor.
    anonyman you are waaaaay off base with your post.

  5. Man, “industry.” I neither market to, nor rarely even sell condos, nor have I ever met the person who runs SF Schtuff (which is where that data originated from, as far as this site is concerned.) And he got the D9 condo sales directly from the database’s July sales info. That same source was seized upon like manna from heaven when June’s not so rosy numbers rolled out!
    I too am sick of the constant snark from people who, when you think about it, are merely angry that property remains as expensive as it is. Well, FYI, I am too. Shoot. I wish I could afford a 3/2 penthouse in Russian Hill like a lot of other people.
    [Editor’s Note: Sell side (agents), meet buy side (analysts). “Merely angry?” Please.]

  6. We’re not gonna take it!
    NO! We Ain’t gonna take it!
    We’re not gonna take it, anymooooorrrreeeee!
    sorry… just thought i’d bring in some levity… I think I may be showing my age.

  7. I’m all for challenging CW and I know there are a lot of like-minded people here who are skeptical of the real estate market and are proud renters-by-choice and/or are frustrated they can’t buy in SF. So if I’m alone on this that’s totally fine and keep doing what you’re doing, I don’t mean to offend. Just seems to me like there’s a certain amount of gleefulness that comes with the bad news around here.
    [Editor’s Note: No offense, we’re simply trying to clarify. Keep in mind that the majority of our reader’s already own, and if they don’t, they could easily buy. We take no “glee” in reporting bad news, we take plenty in cutting through industry b.s. And now back to First and Folsom…]

  8. It is obvious what the sacrifice will be: an ugly tower.Affordable housing and $10 trillion transit center do not mix. WHy not let the few Transbay lots (5?) developed for the maximum profit, that way we don’t have to skimp on design and not have to raise taxes to pay for it.

  9. back to the article in the BT —
    this story really should be paired with the david choo saga, which — 50 1st — will be valued way below “ask” — they have all the same issues
    –good location , not the best
    –soft market makes capital tough right now is they want a current all cash sale.
    — lot of affordable on the site even if not in the bldg will drag land values 20% or so (sfra site)
    but agency is not under distress like mr choo so they are in a better position to negotiate
    and, ironically perhaps, the plan for development at the agency site – you can see it in the eir — while not great is probably better than what 50 1st put together with renzo piano.
    it is a buildable project vs 50 first street’s unbuildable one.

  10. I thought there was supposed to be a “homeless” temporary living shelter build at the parking lot on Folsom west of 1st?
    Has this bad idea gone away?

  11. “[Editor’s Note: Sell side (agents), meet buy side (analysts). “Merely angry?” Please.]”
    Well, not you. Your editorialization today of: “Wait a second, condo prices are off?” dangling as the last word as it does? That is merely one case in point. You continually express a deep cynicism, beyond anger.
    But you did trumpet last month’s numbers from the same source you question here. Say whatever you want about that.

  12. The gleefulness that arises from the bad news is the same chuckling that went on in the 50s when the school slut got pregnant.
    People hate sluts because we give women the power to say no. When someone gives up that power, society never really likes them and secretly is happy when they get what’s coming to them precisely because of their refusal to use the power society gave them. It is especially galling for the other girls who are maintaining that power to have their noses rubbed in the attention that the boys give the slut. But in the end, the slut gets pregnant or some horrible disease and are those girls who had their noses rubbed in her actions wrong for feeling glad that her refusal to say no turned out badly for her?
    I suspect that many people on this site have the same feelings. We give people the right to say “That price is outrageous, the loans are preposterous: NO.” The sluts refused to do that. They unzipped their future earnings and spread their checkbooks wide. And now some are pregnant and others are getting horrible diseases.
    In the meantime, the boys = the real estate industry, taunted those who were not financial sluts, and we all sat home on Saturday night while the sluts had a grand time.
    So do I feel GREAT about my decision not to become a slut, when everyone who was, seemed to be having a great time and threw caution to the wind, when a lifetime of experiences told them not to do that?
    You bet.
    There was just as much glee by the sluts and the boys when prices kept going up through the roof making it harder and harder for the rest of us to say no. Now, it’s our turn to be happy we used the brains we had.
    I hope everyone who uses their heads and doesn’t become sluts gets a chance to see the use of their brain and their willingness to say no to ridiculousness pay off.

  13. I, for one, think SocketSite is providing a valuable service in cutting through the spin and BS of the real estate industry, which continues largely untempered in many respects.
    I don’t recall many complaining when every media outlet was trumpeting “Home prices set new record!” for the past 5 years. Turnabout is fair play, kids.
    IMO, SocketSite is one of the few “honest” real estate blogs, providing unbiased reporting regardless of market conditions. The others seem to fall into 2 categories:
    1) Realtor sites where chest-beaters fawn all over each other with feigned surprise every time a property sells for more than before.
    2) Doomsday sites where the only advice given is to stock up on canned goods and shotgun shells, in preparation for the coming economic apocalypse.
    SocketSite is clearly in the middle, which is why this is the only RE blog I read. Thank you editors. If I ever start that punk band I’ve been mulling over since grad school, I may even name it “Error 500” in homage.

  14. “IMO, SocketSite is one of the few “honest” real estate blogs, providing unbiased reporting regardless of market conditions. The others seem to fall into 2 categories”
    How can you possibly say that? Do you know anything about editorial process?
    Socketsite is a great website. No question. But unbiased?

  15. Any chance you can have the article unlocked like last week, or do we have to wait until Sunday night to read the full text?

  16. “How can you possibly say that? Do you know anything about editorial process?”
    Well fluj, properties featured here either sell for more than before/asking, less than before/asking, or get pulled. In either case, the facts are reported. I don’t recall any “I told you so” comments when either of the latter 2 happen. Nor do I recall an instance of the editor(s) ever opining on something being over- or under-priced, etc. Seems pretty unbiased to me. But I don’t read every comment on every thread, so maybe it’s happened.
    Regarding the editorial process, hey, it’s somebody’s private blog. This is not a democracy or a public service, and nobody forces you to plug in. Not sure why folks feel they should have any influence on the editorial process whatsoever.

  17. tipster-
    How are the “sluts” doing who rented-and-invested-in-the-stock-market doing these days? Or are they the boys? I might not have gotten the metaphor.
    Housing prices are coming down and the rate of return on stock market investments have been great, right? Or not.
    This is why I don’t understand the schadenfreude. Just about no one has done well in the last two years! So why the sense of superiority?

  18. Hi Editor,
    You are doing a great job with reporting the data. Don’t be detracted by those with vested interests in manipulating the information. Of course, it annoys the real estate agents, mortgage brokers, real estate investors, and mostly clueless homeowners. Just how clueless? Nearly 2/3 of those homeowners surveyed believe their homes increased in value last year while, in fact, nearly 80% of homes decreased in value according to a recent Zillow survey. It’s also amazing to me how many of these interested parties bitch and moan about the negative information they gather at Socketsite and yet, they attach themselves to this blog like barnacles on the belly of a whale. Keep up the good work Socketsite because those of us who depend on accurate and thorough data depend on you!

  19. Hey, Dude, fair enough. It’s someone’s private blog — and a great blog at that. (SS doesn’t get enough credit for being a good writer, really, but that’s a whole ‘nother thing.)
    That is not what you said. Look at the lede at the top of this thread. Presenting the facts is one thing. Dropping an editorial zinger after one aspect of the facts is another.
    You said “unbiased,” and this site is not that. I’m not complaining either. It is obviously biased, not as biased as the doom and gloom crowd, but bear(ish) and that’s what it is. Whether or not this site leaned the other way back in 2006 I would not know. I only started posting here last August or September or something.

  20. I want to second fluj — I come here for the great information, this is an awesome site, and sorry to have derailed the thread.

  21. The bursting of this bubble is wonderful from the point of view of economic efficiency. Every loss suffered by someone in the bust is an unalloyed good.
    Analytically, what has happened (and is continuing to happen) is that those individuals who were not able or willing to allocate capital wisely are losing some measure of the ability to allocate capital in the future. Every dollar of loss reduces their ability to foolishly squander scarce resources, and by extension thus increases the wisdom of the society’s future resource allocation decisions. Capital is being returned to its rightful owners.
    For some individuals hurt by the bust, it will be nothing more than a flesh wound, only slightly reducing their future ability to misallocate resources. For others, it’s a mortal blow, taking them completely out of the game of figuring out which resources go where. Regardless of individual outcomes, it’s ALL good, and I for one will not shed one tear – not even a crocodile one.
    The word schadenfreude comes up a lot, and is typically used against bears by people who have no conception of how bad bubbles are for economies and societies (read “Road to Serfdom” for some inkling of why the aftermath of bubbles is terrible for society, as the injured fools always seek to blame others for their foolishness).
    In the spririt of “schadenfreude”, it might be appropriate to quote the great German poet, Goethe (I just came across this quote today – quoted by a Fed president):
    “Everything in the world may be endured except continued prosperity.”
    Bring on the bust!

  22. Tipster…and I had you pegged for a feminist.
    Chris C,
    Already had this discussion. And yes I am a home owner (not selling), and not currently an investor so if prices go down fine by me. I would like to see a larger disparity between run down shacks and nice homes, both coming down but the total fixers coming much farther down. That would be great.
    The thing is this thread is about a lot of housing that probably won’t be built and would bring prices down accross the board (supply/demand). But the housing not getting built is also laughed at here. How is that good?
    The editor is doing a great job reporting the data, but in this case is editorializing to start the thread about an unrelated topic.

  23. “The word schadenfreude comes up a lot, and is typically used against bears by people who have no conception of how bad bubbles are for economies and societies ”
    Satchel, that entire post was schadenfreude and you know it. Du bist ein schadenfruede mensch, bro. Also if I had a nickel for every time a bear said, “Just enjoying a bit of schadenfreude” or “sit back and enjoy the ride” on here I actually would be able to afford that Russian Hill penthouse of my dreams.

  24. The bursting of this bubble is wonderful from the point of view of economic efficiency. Every loss suffered by someone in the bust is an unalloyed good.
    Satchel, this is such a lot of BS. A huge amount of the money lost in the bursting of the housing bubble has gone into a commodity bubble that has slowed down the world economy, caused rampant inflation, and enriched oil companies and tinpot dictators around the world. How that is an unalloyed good, even from an economic perspective, is completely beyond me.
    “Bring on the bust” indeed. The Great Depression was sure fun for all those starving people in bread lines!

  25. I believe there is a plan for an assisted living project on the south side of Folsom at Essex Street (between 1st and 2nd) (Block 11? I forget at the moment what it is called. Some neighborhood folks are concerned, rightly so, that it would set people up for a lifetime home with no expectations, no metrics, and no impetus to be anything except a drain on society).
    p.s. Nothing is unbiased …. We all have biases – they determine what we discuss and in what light we discuss it.

  26. Shoot … I used wrong wording … Block 11 is going to be “Supportive Housing,” not “assisted living” (though I think you may see some of that in the Transbay Project too). Supportive Housing is typically a spot for formerly homeless folks … many of whom may have drug and/or alcohol addictions.

  27. To prolong the tangent, I willingly admit schadenfreude. So what? We bears were right. Many of us who sat on the sidelines throughout ’05 and ’06, despite having the finances to buy, because we saw the storm building. We knew those trends to be unsustainable. And were accordingly chided and laughed at then for “flushing money down the toilet” because we refused to overlever ourselves to overpay for shelter. Isn’t “bitter renter” a malicious term as well? One you’ve used yourself, fluj. If I had a nickel for every time I heard that one, I’d also have a Russian Hill penthouse.
    As I said before, turnabout is fair play. If the bubble hadn’t popped, the flippers would still be laughing at us bitter renters. But those days are gone, so now I’m supposed to hold my tongue? Sorry, ain’t gonna happen. Wir haben rechts gehabt: Baueme wachsen nicht bis zum Mond.
    As a sidenote, I think the best translation of that Goethe quote is, “Nothing is more difficult to endure than a succession of fair days,” and it relates to the necessity of human emontional dynamics for relative perception rather than economic states.

  28. The point is how long will prices stay down, or even go down (in some areas) if more housing doesn’t get built. That is what this thread is about initial, but also inregards to the posts about moving “flippers” out of the market.
    I liebe Schweinhaxen…are we all adding German into our posts today?

  29. Dude,
    You’re right? Show me what’s cheaper. Very, very little of the type of inventory SS posters would actually want to buy is cheaper in SF, if anything at all. Certain areas are even more expensive right now than they ever were. The level of crowing is not congruent to the dip in price by an incredibly wide margin.
    And you know what? That’s damn annoying. Yall crow all yall want when it’s fitting. It isn’t yet here. IMO 900K to 1.2M is going to take a hit, soon. Maybe that will snowball. We will see.
    “Bitter renter” — hmm. I don’t know man. That doesn’t sound like me. Maybe in a fit of schadenfreude.
    (Still can’t get over your lack of bias comment, tho.)

  30. Ok. This is a threadjack but then again…
    I enjoy both a little snark and cheerleading and sometimes some critical thinking but given the imperfections of RE data and shortage of crystal balls I much prefer the RE Pr0n content over the data centric or econometric or forecasting content. It also saves me the trouble of looking sheepish in front of the agents at open houses when I’m merely gawking.
    Please, let’s have more leopard skin wallpaper, toilets in kitchens and fabulous decks and less arm waving.
    /owns a top floor in Russian Hill
    //it was featured on SS and the editor called it “expensive”
    ///Ha! Got it for about $600/sqft.
    ////Not yours, bitches!

  31. One you’ve used yourself, fluj. If I had a nickel for every time I heard that one, I’d also have a Russian Hill penthouse.
    No you wouldn’t. You might have a boatload of extra money, but it’s doubtful (by your year’s of comments) that extra money would have ever convinced you to buy during the past few years 😉

  32. fluj – many condos in Soma are cheaper than they were at the peak (some featured here). Lots of places in Sunset/Parkside as well, especially west of 19th. But you knew that already.
    Those are the areas I follow, and could care less about $25MM D7 trophies or Noe vics. Nor will I mention Bayview and Visitacion Valley, since I have no desire to live there, either. Both of those areas are statistical outliers to me.
    I won’t push you on the bitter renter stuff. But the “you berrors are never going to buy anything anyway” line is straight from the Fluj’s Greatest Hits album.

  33. One part of the quote stuck with me “and then you roll in the increased affordability (probably around 25 percent) and you really have to do some hard math.” I read this as meaning that its possible that the new 25% BMR quotas might not pencil out. City hall may have shot themselves in the foot with the new requirements. We might be in for another 20 years of empty lots.
    Tipster’s slut metaphor will go down in SocketSite infamy.
    Alles ist Hundscheiße im Stadt

  34. “Every loss suffered by someone in the bust is an unalloyed good.”
    Umm, satchel, I think we generally agree about many things, but on this one, you’ve lost me.
    Just because someone participates in a bubble doesn’t make them a responsible party to it. The key word is responsible.
    There are many folks who are getting wiped out by the collapse of this bubble. Some of them deserve it. Some of them do not. Do the CEO’s and regulators of Fannie and Freddie get hit in proportion to their role in this mess? Or does their ‘flesh wound’ even count?
    Some folks bought a home because that is what they wanted- a good, maybe even a consumption good, in an area they wanted to live. Maybe they were in over their heads to start. Or maybe they developed a major medical mallady that left them in a financial mess. You would claim they are just the same.
    Satchel, you are way off base here – and sorry, but in this case I have to call you on it (and yes I agree that the deflating or collapsing of the bubble is an excellent economic event, but even as a libertarian I can see pain and feel pain, that’s what keeps me human).

  35. I’ll bite, fluj:
    From the editor:
    “Wait a second, condo prices are off?”
    That’s what started this whole subthread. Is that really that biased? He points out that someone in the industry said condo prices are off. Big deal.
    Live by the sword, die by the sword: the media hyped the real estate bubble on the way up, and now the industry complains that they are reporting the bust on the way down.
    The guy who was quoted said it. The SS editor pointed it out. He provides a forum to counter it if people want. Seems like a great thing.
    But one thing to remember: this is HIS BLOG. Where is it written that he isn’t supposed to have opinions? In the same way that I have repeatedly pointed out that the MLS is a marketing tool for its members and not an unbiased source of information, why do you expect someone’s own blog not to reflect the opinion of the editors? Why would you expect him not to have one?
    Geez, the NYT is liberally biased and the WSJ is conservatively biased. Doesn’t seem to hurt anything. Just a different target market.
    As for the renters in the stock market comment, there are other things to do with your downpayment (or in my case, the purchase price) than to go long in the stock market. I haven’t been long in the market in a very great while. Instead, there are money market funds, treasuries, shorting vehicles, and god forbid, starting your own businesses, all of which I did, instead of mindlessly joining the sluts. VERY happy I did.

  36. “fluj – many condos in Soma are cheaper than they were at the peak (some featured here). Lots of places in Sunset/Parkside as well, especially west of 19th. But you knew that already. ”
    Yeah, you and I agree there. Except for some weird Parkside stickiness and even upticks? Why do you think that is? Bigger houses in Parkside are going for record bucks, like, now. I can tell you that Asian buyers with lots of capital is the SF r.e. cw but I’m not sure that’s all there is to it.

  37. Milkshake – I think the quote about “25% affordability” in the article may be a little uninformed. I believe the Redevelopment Agency recognized that they couldn’t mix BMR’s in the high-rise and make the project appealing. So, the tower is going to be all market rate. The Transbay Project area in general MUST have something like 33% affordable housing – I think that’s part of the State of California’s agreement to hand over the Caltrans parcels along Folsom.

  38. Milkshake, that’s what I’m talking about. The point of the story is that the 25%BMR plus all the other stuff the city is requiring make it not pencil out. This is a pipeline project, I think, so that means $4sq.ft. for each foot of residential goes to low income housing on top of the 25%.

  39. About condos in SOMA being cheaper than the peak. Well, haven’t we seen two buildings (246 2nd street and 1150 Folsom) where prices are back down to 2000/01 prices, and in the case of 1150 Folsom, evidently even BELOW?
    (Before I get attacked here like I usually do when I point out some supremely poor “investment” choices made by home buyers back then, please check the numbers yourself – it’s getting pretty hard to argue against the idea that these buildings haven’t fully “unwound”.)
    @ enonymous, I think you are confusing conceptions of morals and desert (do buyers “deserve” the loss or are they “resposible”) with the economics. On the total unfairness of the whole thing, you and I would most certainly agree. After this thread gets old and it isn’t so OT, I’ll try to post some ideas. Even so, I still maintain that it is good even for those hurt. We’ve all been there…. and come out smarter for it.

  40. But you did trumpet last month’s numbers from the same source you question here. Say whatever you want about that.
    In this case we’re not questioning the data or the source (MLS), we’re questioning the interpretation (“a great July” in your own words). And in terms of “trumpeting” or a “manna from heaven” report, here’s how we presented said data:
    Listed Sales Activity In San Francisco: Down 25-30% In June (YOY)
    If you ask us, it looks pretty damn factual and without any “great” spin (but then again, we’re biased). And now once again, back to First and Folsom…

  41. Kind of ironic that SOMA (the site of the last “great unraveling”) is also on the forefront of the next one…
    Eventually we’ll figure out what to do with all of that SOMA land, right? 🙂

  42. On the “morals” issue: Tipster’s “slut” analogy makes it clear that some are viewing this as a morality play.

  43. Fifty stories is impressive, but it is only about double the size of most other big buildings in the City, and and at that height it ends up scraping up against the costs of construction curve which gets ugly at about that level. The unusual road configurations look like they take a bite out of available space as well.
    It seems like this would have better results if they went for a mix of unit types instead of jamming affordable units in there. Urban towers on prime locations aren’t about affordability. The whole affordability thing is more about supply and demand and can’t be forced.

  44. These posts are entertaining, lots of drama mixed with some pretty intelligent arguments on both sides. I love the ones about gloating in the face of others losses, what assholes. I think of a much more appropriate quote “misery loves company”.
    Funny though, but threat shows alot of bitchiness. Kind of at new level, even sockesite is clawing on this one. Keep up the catfight…please.

  45. 25% affordable for this development:
    “Under a 2007 agreement between the city and the state Department of Transportation, 35 percent of the total housing built on the Transbay District redevelopment sites must be affordable. However, not every individual project has to meet that threshold. Several of the parcels on the plan have been targeted for 100 percent affordability, creating breathing room for other developments, like Block 8, to do 25 percent. In addition to a lead for-profit developer, the Redevelopment Agency is seeking a nonprofit housing builder to handle the two affordable housing structures, which will include 70 apartments and be available to families making up to 50 percent of Bay Area median income. Eighty units will be moderate-income units — 120 percent of area median income — sprinkled throughout the 436-unit tower and the 11 townhouses.”

  46. So that’s a separate for profit developer and a not for profit developer for the city run stuff…what is the city paying the not for profit bulder?

  47. Here are the numbers, I think:
    The tower: 15 percent BMR as required by the city. 70 UNITS
    The townhouses: 15 percent BMR as required. 2 UNITS
    The podiums: 100 percent affordable; that’s 80 units of 50 percent medium income

  48. editor –
    I would pay $10 per month for a socketsite upgrade service that allowed me to screen out:
    1) fluj, ex sfer, dude and all the other sandbox screamers obsessed with each other
    2) everyone who bought at Infinity and ORH
    would you consider this? parts of your discussions are great, parts of them a total waste.

  49. The 15% in the tower sucks. Why not bigger “podiums” to take these 70. Plus you still pay $4-$10/sq. ft. to the city for more low income on all of the feet on top of that. I’m sure when the supes get to it that $ goes up.
    This stuff should go to the voters so it could get voted down like the hunter’s point. Mandating builders don’t make a profit is not the way to build housing.

  50. I believe the curved ramp you see in the photo will be removed when Transbay master plan is completed, so the land use and area issues previously mentioned will not be an issue at all (if I understand correctly, and I have been following this project for years)

  51. Yep the curved ramp removed so that you can exit on Clementina at Fremont St (Fremont will become a 2-way). The purpose of this is so there can be towers all along the north side of Folsom St (from Spear to Essex).

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