Speaking of “recalibrating,” the list price for the record-setting Penthouse Unit #10 atop the überexclusive Pacific Heights building at 2006 Washington Street has just been reduced from $45 million to $35 million in one fell swoop.
As we first revealed and reported at the time, the 5,400-square-foot unit was acquired for $32 million or nearly $6,000 per square foot in a hush-hush deal back in 2015 and then gutted and completely renovated, “with the most exquisite detail and materials by internationally respected artisans, Architect Andrew Skurman and Interior Designer Suzanne Tucker.”
The “most significant Penthouse in the City, if not on the West Coast,” returned to the market priced at $45 million last year, a sale at which would have obliterated local records on both an absolute and price per square foot basis. And while a sale at $35 million would be more than the $32 million which was paid for the Penthouse in 2015 it would represent a significant loss when accounting for the cost of its renovation while masquerading as “appreciation” in most industry stats and reports. We’ll keep you posted and plugged-in.
How much more than $3 million did it cost to renovate?
Likely $6.5M
5,400 sqft unit renovated at $1200 per sqft
Super expensive interior designer.
Based on the timing, finishes and parties involved, we wouldn’t be surprised if the budget was at least $1,500 per square foot and definitely not less.
Yeah, no way this cost JUST $6.5 M. 15 years ago, maybe. The last Tucker & Marks designed home I went into had a $5M budget for furnishings alone and that was a long time ago. This is a bit staid even for T&M; maybe client-directed. This could, as someone else mentioned, easily have been 2k per foot for construction and quite a lot more for the actual furnishings.
The Schultz penthouse was unquestionably the most desired PH in SF (I still contend it would’ve sold for more 5 years ago) so the drop in asking price here is unsurprising.
Finally, these sorts of ultra-luxe remodels are massively expensive and total vanity projects. Unless the owner is a well-connected developer, doing anything like this these days is going to result in a loss if the seller doesn’t plan on a decades long hold.
Assuming the agents/ staging/ closing costs will be about 6% of the 35 million, that would be a massive 2 million right there the seller has to account for. Which means if they bought it for 32 million, they would effectively get 33 million in their hand, when all said and done. That is only 1 million more than their 2015 price. I am confident the permits, designers fees and renovation cost significantly more than 1 million, so this is likely a loss, not that these folks may care too much.
It looks like you are assigning zero value to living in this awesome apartment for 7 years.
Keep in mind that the renovation took over 2 years to complete. And of course, there are carrying and opportunity costs to consider as well.
5% commission is standard for San Francisco, and they probably paid less than that.
This has been my experience. 5% (half goes to each party’s agent or all to the single agent who represents both the seller and buyer.)
4% when we bought our place 10 years ago. Market was slow then but starting to turn around. All we did was ask and the answer was “okay.”
Your numbers are actually low. Probably closer to 10% of sales cost.
Little know fact. The SF City Transfer Tax alone would be $2.1 million on a $35 million sale. City gets a 6% fee on every sale over $25 million.
Effectively the City of SF owns 6% of every building in San Francisco over $25 million in value. This has to be paid right off the top even if limited or no equity. Watch for this as significantly reduced office buildings are sold, wiping out all equity and/or causing foreclosing lenders to write checks to close the final sale.
The audience for people who want a $35mm apartment in San Francisco is small and shrinking. This is a white elephant that probably wouldn’t clear even at $25mm.
Oh, I think people WANT it. They just can’t afford it.:-)M
Uh, no, the people that can afford it don’t want it. That’s quite obvious.
Anyone who lays down $6k/sf then guts the place can afford to lose half of the $35M and not be worse for wear.
That Tucker & Marks “Grandma” Interior Design although elegant, definitely isn’t for everyone…
Most of it is just drapes and area rugs that could easily be replaced along with getting new rented staged furnishing to achieve a fresh contemporary look. The actual hard finishes are very attractive and well-done. The “grandma” look could be almost entirely removed by a good stager. There really is not any major renovation you would need to do, and if a buyer truly wanted something ultra-modern, they would not look at a traditional old residential building in the first place.
Buying real estate is one place where you don’t want to set records.
Apparently many well to do U.S. buyers are buying second homes in Europe to take advantage of the lowered euro and pound. Makes sense to spread the wealth around and enjoy a different scene, culture, tax write-off, etc.
I know enough to know that at least 18-20M went into this gut remodel project, which took around 3 years to complete. Needless to say, the sellers are taking a significant loss.
That is the ultimate nightmare scenario of time and expense going into renovating only to come out with a complete misread on the return on investment. It is an uphill battle dealing with architects, contractors, and interior designers all of whom want to upsell their “vision.” Acceptable if you have certain aesthetic tastes which only you can appreciate for the 40 years you plan to inhabit the space. Otherwise, decor can get dated quick. Now I understand the common sense appeal of the whole white box ultra minimalist design. Leave it up to the buyers to add their own style and tastes.
So the seller is dumping it? All offers encouraged?
This property showcases the highest level of craft conceivable. Look at all the extraordinary details. The millwork, moldings, stone work, precious materials, etc. The architect, designer, and contractors who worked on this residence are among the best in the world. The owners clearly spared no expense. I would estimate at least 3-4K per square foot for this gut renovation.
As others have articulated, the owners will likely lose on this, but what a piece of art they’ve created. Stunning…..
I love the kitchen, perfection! I wish I had the money to afford this beautiful place.
In related neighborhood and rarified air news, there’s been Another Sudden $10 Million Price Cut in Pac Heights.
UPDATE: 2006 Washington Street #10 has been re-listed anew for $35 million, a sale at which will be considered to be “at asking” and with an official “1” day on the market, according to all industry stats, as of yesterday.
$35mm at 5% 1 year T-bill rates produces $1.75mm per year in income, or around $149,000 per month.
Like, a pretty-okay 911 every four weeks.
Or 10,000 $15 Subway foot-long Sandwiches.
Real value is @$25mm based on my sandwiches and Porsches spreadsheet.
This is for ppl who already have multiples of $35m in treasuries and other investments and who are looking for a residence.
Regarding the cost of the renovation, I wouldn’t speculate even an approximate amount, but the simple fact that Tucker and Skurman were hired for the project means it was very expensive. Add to that, looking at the photos of the results, whoever hired them, must have said something along the lines of, “Please spend as much as possible. If there’s a more expensive stone, or other material used in any of the finishes or furniture, go for it!”