The Most Expensive Home in San Francisco is Still Under WrapsNovember 2, 2018
The San Francisco mansion at 2901 Broadway has been listed for $55 million. Or rather, it was listed for $55 million back in 2007, prior to the market tanking.
Based on our calculations, which we just double checked, that’s $10 million more than the current $45 million price tag for 950 Lombard (which has recently been misreported as “the most expensive home ever listed” in San Francisco) but $15 million less than the penthouse atop the San Francisco St. Regis which was listed for $70 million back in 2008.
While 2910 Broadway ended up selling for $28.25 million in 2012, purchased by Jay Paul, the billionaire developer behind the tower at 181 Fremont Street, another eight figures has since been invested into the complete transformation of the former Decorator Showcase home which has effectively been under construction for the past six years and isn’t nearly complete.
And in the end, the cost basis for 2901 Broadway is likely to be around its circa 2007 list price, at least.
Comments from Plugged-In Readers
The logic behind this project, along with several others in A+ Pacific Heights are proceeding as “consumption” versus “investment” decisions by their owners. AKA they make no economic sense.
The Chronicle article where they estimated Paul had spent a shocking 5 (!) million dollars on the construction made me laugh. The crew seems to work 7 days a week and there’s no end in site. A realtor I spoke with years ago with a nearby listing estimated they were well over 40mm in at that point, and that was maybe 4-5 years ago? I’m speculating wildly, but 100mm wouldn’t surprise me since a few neighbors put a good 50mm into their renovations. Obviously this isn’t an investment and will never come back on the market, at least for a few generations.
However, when talking bout expensive listings, it’s notable that there’s an unusual amount of 30+ mm listings. We’ve got 2900 Broadway at $32M, 2900 Vallejo at $30M, 950 Lombard at $45M and 2590 Green at $40M right when the market is cooling off.
And while just below your $30 million mark, don’t forget 2820 Scott Street which is back on the MLS with a $29.5 million list price and well positioned to repeat its 2008-era chase of the market down.
Denis – where are you getting these numbers for renovation costs? I was told that building a high end SFH home typically costs somewhere in the $800/sq ft range.
If you are a developer and can build at cost, you can probably get it done for $800 per foot. But a private owner in Pac Heights should expect to pay minimum 2k per foot for high-end construction at this point; this is coming directly from an ultra-high end developer.
Also, I submitted a small project to multiple contractors who came back at 1800-2.5k per foot. A few Irish guys with a pick-up said they might could get it done for 1k per foot, but with Trump’s tariffs on steel and the massive labor shortage, construction costs have sky-rocketed. As such, two engineers involved told me my project would easily go 1mm over budget, so I scrapped the idea.
A decade ago, a prospective buyer for 2901 had a high-end contractor put together an estimate for the remodel. The contractors told me personally that the structural work alone to stabilize this place would start at 10mm and prices have only gone up since then. The north side homes on Broadway that have been owner remodels (so excluding 2712) were done for 3-4k per foot according to realtors in the know, and that likely doesn’t include interior design budget which can easily top 10mm alone.
Socketsite also reported that the Mercy Housing development on merrimac per foot cost was $614 and that’s for subsidized housing. Going through the entitlement process for some of those projects is nightmarishly expensive and the price only goes up in D7.
Jay Paul owns a construction firm, so he may save a few shekels.
Wow, those numbers seem really high. I assume it’s for completely turnkey construction (where you just give the GC the plans and you come back when its done with the keys) since I heard that can increase costs a lot as opposed to something more hands on. Also are those numbers, 2-4k per foot, for remodels where the structure is already in place or for building a new house from scratch?
The Pacific gave some numbers [for building out warm shell units]: “[B]uyers can expect to spend an additional $650 per square foot, or up to more than $1,500 per square foot, at the highest end, to complete the unit.”
Not sure if the costs are higher or lower for a condo, though.
I’m really only referring to places like this that are pet-projects for the owners and a few other properties around Pacific Heights some of which will come online later. All are down to the studs remodels with new foundations and substructure. Of course, this doesn’t refer to homes with just cosmetic upgrades or most spec homes.
Ah I see. So just the foundation and substructure costs is likely 10mm (for a 6,500 sq ft home that’s ~$1500/ft) or more? I assume they’re doing the works then.. drilling piers into bedrock, etc. Then if you add the interiors that’s another $500-$2500/sq ft for a total of $2k-$4k/sq ft all in hard costs? (not including architect or interior design fees)
Although it looks imposing, the house itself was a disaster in its original configuration: basement kitchen, tiny bedrooms, etc. The developer has hired an excellent (and expensive) architect, who will not degrade the house into yet another sterile Daly City tract box inside. If the builder cheaps out on fixtures and finishes, it would not save much relative to the total cost. But who the heck will buy it? And how can the entire enterprise return a profit, especially considering the time that capital has been tied up?
Uh, by passing the entire $30M+ completed home to his heirs without the federal or state governments getting any of it?
I’m not a tax accountant, but my layman’s understanding is that If the current owner holds on to the place until he dies, he can bequeath it to his heirs and at that point the fair market value will be appraised (in the case of this house, that’ll be more difficult than usual, but I’m sure the estate executor will find someone who can produce an estimate that will pass muster with the IRS) and the heirs get to act like that price—the inherited price—is their cost basis (the so-called “stepped-up cost basis”).
The heir or heirs then sell it for (that same, recently-appraised) market value, leaving no taxable capital gain, and thus get to keep the proceeds (minus the transaction costs) tax free.
turning it into something it wasn’t intended to be
Should we go back to storing horses in the Palace Hotel’s Garden Court?
Someone very close to this project told me about a year ago that one step (hand hewn marble) for the basement swimming pool would cover the cost of their college tuition. This person also said that Mr. Paul had not yet determined whether or not to keep the house, but that he was leaning toward selling it. The estimate I was given was $40M over an initial renovation budget of $6M. Keep in mind that they’re adding multiple underground floors, including a sports pavillion, swimming pool and theatre.
None of your figures make any sense in the real world of non-Pacific Heights construction. On the Peninsula, there are many high-end builders of homes where the price per square foot of luxury homes built from scratch is $500-$600 per square foot or less. Yes, this doesn’t include crazy structural work or things like propping up a home to build a basement or garage underneath, etc.
You ought to look for some different Irish guys in a different pick-up . . . you might save 50% or more.
Speaking of 950 Lombard: Price Cut for the “Most Expensive Home” in San Francisco
UPDATE: The “Most Expensive Home in San Francisco” Sold for Far Less
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