As we revealed earlier this year, the modern 25-unit development at 603 Tennessee Street, across the street from UCSF’s Mission Bay Campus, a block from Chase Center and a short walk from the commercial corridors of both Dogpatch and Mission Bay, was sitting vacant and facing foreclosure, with the development team having declared bankruptcy and attempting to sell the roughly 20,000-square-foot development prior to being foreclosed upon.

And despite having been reduced down to $16.5 million or just over $800 per finished square foot, the completed 25-unit development, which could be “leased immediately or re-designate[d] as condominiums,” was been foreclosed upon at the end of July, as first noted by a plugged-in reader at the time, and Avidbank has been issued a trustee’s deed for the property. We’ll keep you posted and plugged-in.

22 thoughts on “Modern New Development Fails to Sell, Taken Back by The Bank”
  1. OK its new construction, up and coming location.
    Any property will sell if its priced correctly, and exposed to the market with full broker marketing campaign.
    What’s wrong there??

    1. The unknown cost of sweeping all the pigeon droppings off those ill-conceived ledges is keeping buyers away.

      1. And from what I can see, there’s no access to those ledges, except by putting up scaffolding or perhaps some kind of window-washer system suspended from the roof. Ill-conceived indeed, unless the ledges are coated in Teflon™.

    2. I imagine that the developer group was in denial, and the results indicate fairly obviously that they didn’t price the complex correctly. Like I said last month, now is the time for price discovery to begin, as the bank has an incentive to maximize actual returns and isn’t captured by sunk cost considerations.

      1. Technically, the street this is in on T-bones into the side of the UCSF Medical Center Hospital. Across the street your neighbors are AAA Flag and Banner and Golden State Auto Body. The local coffee joint is in the lobby of the UCSF Nancy Friend Pritzker Psychiatry Building, so that may be a bit of a downer, or upper perhaps, depending on the day. But you are less than two blocks from the Ramp Restaurant, so you can self medicate.

    1. Hayes Point is the same it was given
      paused pending commitments by tenants or new capital partners. “Until we get one of those two things to come to fruition, we won’t restart,”(Revised ETA: 20257)
      Is this a new trend, giving pretentious, weirdly-phrased names to projects, as opposed to (simple) adresses, or eponymous titles ??

      1. This “new trend”, like “The Dakota” in Manhattan (built 1880s)? I mean all you have to do is walk up or down Bush, Sutter, Post, Pine, etc., and see apartment buildings in each block that bear all sorts of idiosyncratic names. Seems like by far the least important hill to die on…

        1. And what about the Tontine Crescent….that was , what 1790 ??
          I s’pose you’re right, but I viewed this more as a commercial structure than a residential one. And, no , I shouldn’t waste time coming up with reasons to dislke various projetcs (there’re usually plenty of reasons to chose from already !!) 🙂

      2. The old art deco building at the corner of Hermann/Laguna/Market is officially “15 Hermann”, but the plaque posted outside the front door says it was called “Allen Arms”.

  2. Maybe WeWork can buy it, oops they’re going bankrupt. That should really help the CRE rebound in SF.

    1. Isn’t that interesting? Just the other day the editor posted that the the average asking price per ft.² of the homes which are on the market in San Francisco was just under $925 per ft.² earlier this month. And units in this building should be able to command some amount of premium for new construction, no?

      At “just over $800 per finished ft.²” just before it went back to the bank, it seems to me that with the surplus of flippers, flippers, developers, and other hangers-on in the real estate “game” we have running around this town, some value investor type should have snapped this building up. Even accounting for the cost of sales, including overhead, holding costs and commissions that they say people tend to underestimate, there should be room for a decent short-term profit. Since no one took advantage of the ample opportunity to buy this building at least 15 percent under current market value for the units, the marketplace seems to be saying there isn’t.

    1. Nope, the housing crisis is, and always was, a myth, a myth propagated to fast-track “market rate” condos for gentrifying speculation (aka “class war”) and money laundering..There is, though, an affordable housing crisis, courtesy of a historic tulip-level housing bubble. As housing is both an asset class and a necessary social good, the bubble will take some time to work out, whereas commodity asset bubbles (like tulips) can resolve in hours.

      The effects of massively misallocated capital will be felt for generations, as many parcels of land have now become prohibitively-expensive white elephants that can’t be repurposed for better uses, such as family housing, parks, artist and musician studios, and PDR jobs for workers whose families have lived here for generations.

      The real estate gangster cohort killed their golden goose, and the city is now dealing with the social fallout of the frenzy.

  3. Simple case of Bank debt exceeding market value of complex. Bank takes property back, re-prices the comples and sells as a rental project at a discount to the existing debt, writes down the loss, move on to the next. It does seem that at $600K per door, it might work as a rental so we will see.

    1. Right next door, in the also Stanley Saitowitz-designed devoid of curb appeal grey cast concrete sarcophagus building at 615 Tennessee St. (built in 1997), a 2 level loft offering 1 bedroom, an upper level loft, 1.5 bathrooms, and 1 car enclosed parking (Unit 101) is on the rental market asking $3950. It will be interesting to see how the bank’s rep prices the fourteen two bedroom units in this building if they come to market in that manner.

      1. That’s good info. Back of the envelope says throw out the three affordable units, leaving 22 market rate. Average rent around $3900. Conservative vacancy factor of 15% leaves about 19 units at $3900 gross monthly expenses /cap rate or your choice. I would say $12MM to $13MM and this could work as a rental project. Any takers? Avid will find out quick as I don’t see this as a condo deal.

Leave a Reply

Your email address will not be published. Required fields are marked *