Strata And Avalon III Riding A Mission Bay Rental Wave
June 26, 2009
“The Strata, the first development on the still-unopened new Fourth Street, has leased 103 [out of 193] apartments in 90 days…four apartments a month above leasing goals, although Urban Housing Group has slashed rents about 15 percent from original projections. Meanwhile, AvalonBay’s third Mission Bay building, which opened less than a month ago…is 36 percent leased and 25 percent occupied…”
∙ Mission Bay lures renters with new luxury housing [San Francisco Business Times]
∙ The Scoop On Strata At Mission Bay, Its Environs And Rents [SocketSite]
∙ Avalon At Mission Bay III (240 Berry): Now Open And The Rents [SocketSite]
Comments from Plugged-In Readers
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wait, no “I would never pay those ridiculous rents in a generic neighborhood with no soul, filled with chain stores” comments from the peanut gallery?
Did everyone take Friday off?
I’m surprised to hear that the Strata is doing so well. The building sits on a barren dirt field a good quarter mile from anything.
“With the Strata, Avalon, Argenta, Artani,and several large to mid size developments in the south east part of the city going rental. (Not to mention the individual units being rented by speculative condo buyers bets gone bad).
Over a thousand units in the next 12 or so months, all being released into a faltering economy. Rents in the so called “Life style” segment are headed for a steep correction.”
Steep correction? Haha, correction yes, but not sure you got the slope right jimmythekid. try again!
as a long term bull, yes, I am surprised too. Are these units rented at the asking, or after deep discounts?
Maybe it is time to look at this area for rock bottom bargain then? I am still a little suspicious?
I’ve looked at some of these buildings. Rents are being discounted some($100 off each month for a year lease or 1st month free). Maybe they throw in parking or give a $100 a month discount on parking. Beyond that, they are not being discounted from what I’ve seen.
Thanks.
I also have two friends who just recently purchased their first home, one paid $25K over asking, one offered $31K over asking (short sale, still pending).
Maybe market did turn the corner without SocketSite knowing it?? How can that be??
I’ll admit I’m surprised.
ester,
over asking is a pretty meaningless stat; please tell us how those prices compare to the homes’ last sales price and whether or not there have been renovations/changes that would affect the houses’ values. since one of them is a short sale, I think we can all guess what the data actually reveals…
but feel free to post data instead of unsubstantiated meaningless anecdotes and prove me wrong.
K&L, I’ll bite. I’m glad that all those people who will “pay those ridiculous rents in a generic neighborhood with no soul, filled with chain stores” have been grouped together in one neighborhood where they can enjoy one another’s company.
I can’t speak for Strata, but there are some deep discounts going on, in addition to fallen asking price. The one I signed got discounted 15% right off the bat. (Strata had free parking thrown in when I talked to them a few months ago.) Bottom line: all large rentals (Argenta, Strada, Artani, Rincon Residences, Paramount, Archstone…) have been very aggressive in filling vacancies, and they appear to be succeeding. BTW, I wouldn’t completely trust the numbers they are putting out. They obviously have self-interest in looking like they are in demand.
not specific quantifiable data, but everything that I’ve looked at that is so-so is pretty much active contingent up to $800K range. Like Ester, I’m beginning to wonder the same thing.
Now here is a great idea for Daly and other protectors of the weak: all these people are living in affordable apartments, affordable to them. But you never know when you may lose your job or have other setbacks. So the wise solons of SF should pass a new law controlling these apartments, not just those built before 1979, to protect the vulnerable renters from the greedy capitalist evil-doers who own them. What da ya think?
Japan real estate wasn’t a straight shot down. Long term it was down, but short term, prices drop until the people who have been watching (and to whom the prices look cheap in comparison to when they started) buy, and then those people are out of the market.
Then prices drop again until the newer wave of buyers thinks they look cheap.
With an unemployment rate of 10%, the market cannot “turn any corners”.
As for SoMa and South Beach rents, they are in the process of dropping pretty dramatically. As soon as Avalon opened their doors, the people trying to rent property in that area knew high rents were going to be a thing of the past for that area, at least for awhile. You don’t have that kind of inventory show up and not have an oversupply problem. Particularly in a market in which new hires were scarce this year.
just curious, in comparisons to Japan, the country, perhaps the overall US market will be similar, but how did nicer parts of Tokyo fair the correction? I saw international house hunters and the apartments were really small and more expensive than SF it seemed, granted interest rates were only 1%.
dch,
I don’t know what you are talking about. I used the fact the some properties are going at above asking to speculate the market maybe bottomed aleady.
never said that price is back to historial high, or anything of that nature.
So, who/what are you arguing with/about?
ester, the fact that properties are going over asking doesn’t tell us anything — except that the asking price was lower than the market price. it doesn’t tell us that the market is going down or up or has bottomed out.
If there are still short sales going on, chances are the market is not doing so well — it hasn’t bottomed yet (yes, i know prices could be up from a bottom but still down from a peak).
Tell me, how does a property going over asking show we’ve hit the bottom?
ester – dch’s point is that your comment:
I also have two friends who just recently purchased their first home, one paid $25K over asking, one offered $31K over asking (short sale, still pending).
is pretty meaningless without more data behind it. What was the asking price? What was the prior sales price? Where were the properties located? If you have a friend who paid $125k for a house in a deserted neighborhood in deep Contra Costa Co. being offered for $100k that is much different then the same friend paying $875k and outbidding several other buyers on a SOMA condo that last sold for $500k in 2006 and was on the market for $850k. We need more data to assess your anecdotes, otherwise I hesitate to declare that your friends have bought the bottom of the real estate market…
I don’t get it… this article doesn’t seem that positive to me. Consider the numbers:
leased 103 [out of 193] apartments in 90 days…four apartments a month above leasing goals
So their goal was about 30 apartments per month, and they achieved roughly 34, about 12% ahead of their target. And it continues:
slashed rents about 15 percent from original projections
So they cut (or “slashed”, according to the article) prices by 15% and are experiencing somewhat higher than expected demand? To me, this data proves neither the bull nor bear case for rental rates, although each group can find something to please it. It would be more useful to find out what the average rents are and how they compare to leases signed two years ago (at similar properties nearby).
And for me (a once and future buyer) a cost comparison to nearby condos is even more interesting…
dch:
If you decide to see nothing, of course, you won’t see anything.
“If you decide to see nothing, of course, you won’t see anything.”
Oh, lordy.
Pot. Kettle. Black.
With regards to Avalon 3, they have something like 30 tenants and 80 units at the moment. Each month on the 15th another 20-30 units are turned over.
So these stats they put out are meaningless. Their current incentive is first month free and $100 off the base rental price per month. But they also raised parking to $150/spot up from $100.
Their incentives continue to rise, I’ve toured the building and while the model units are nice most of the units are rather small.
Rent is beginning to fall inline with market realities but still a bit too high.
what is the rough sq ft of their 2/2?
Are these rent controlled?
I have been thinking about getting a unit from gateway and sub-lease it. In another 5 years, I should be making money on it. Would they discover that? what can they do even if they do discover?
Ester,
New construction is NOT rent controlled.
Which makes your illegal sub-leasing scheme pointless.
Jason, I think ester’s comment was more a not-so-subtile way of selling the idea rents could only go up from today. Jump now before they go higher and someone else profits from where you chickened out!
A typical bull tactic there to induce panic for the masses who always fear to be overpriced (a rarity these days). These comments used to be skillfully crafted and they worked as long as the “market” (read the debt binge) fueled ~15%/Y increases for 8 years (rents or sales).
Nowadays you can see the rusty machinery behind the scenes as the panic shifts to the bull side. These bright cheesy professional grins don’t blind people anymore out of reality.
Oh yeah, I guess I didn’t really consider the possibility of anyone falling for that.
more supply + less demand == higher rents in bizzaro world…