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Posted Nov 2, 2007, 4:34 PM
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BANNED
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Join Date: Jun 2006
Location: San Francisco & Tucson
Posts: 24,071
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Quote:
The sky's the limit
San Francisco Business Times - by J.K. Dineen
Millennium Partners is not satisfied building the tallest residential tower on the West Coast. The developer wants the priciest one as well.
With its sales office opening Nov. 8, Millennium is poised to test uncharted territory in the city's rarefied condo market. At the top of the 647-foot-tall building, a quartet of penthouses on the 59th and 60th floors of the blue-gray glass tower, prices will hover around $2,150 a square foot. With sizes ranging from 5,500 to 5,800 square feet, not including spacious outdoor terraces, that puts each penthouse around $12 million. On floors 49 through 58, the condos will range from $3.3 million to $6 million, an average of $1,670 a square foot. From 26 to 48, pricing goes from $2 million to $3.25 million, or $1,375 a square foot.
Even the bottom 25 floors, at $1,100 a square foot, are richer than One Rincon Hill, which averaged $1,025.
That bullish pricing, amid a weakening national and Bay Area housing markets, reflects demand at three previous ultra-deluxe projects: Millennium's Four Season Residences, the St. Regis Residences, and the Ritz-Carlton Club and Residences, according to Millennium Partners Managing Director Richard Baumert, who is overseeing the project.
Diana Nelson, who led sales at the Four Seasons and is heading up the effort at the Millennium, said resale values at those earlier projects back up the aggressive pricing.
Two resale units at the Four Seasons are in escrow at over $5 million and one unit just closed at $6.6 million. All three condos sold between $1 million and $1.5 million over their original price tag.
"We know what the demand is at the Four Seasons, not just for the penthouses but that style of living. Now we have the historical data to support how people do love this kind of lifestyle," she said.
In Millennium's 13-building portfolio -- which includes towers in Boston, Los Angeles, Miami, Washington D.C., and five in New York -- only 50 Central Park South in Manhattan has higher prices than the Mission Street project, said Baumert.
"There has been a tremendous amount of interest in the penthouse space, but we have not yet entered into formal conversations," said Baumert.
He said the majority of buyers inquiring into the penthouses would buy two and combine them. And the $12 million-plus price tag -- $25 million if you're grabbing two -- doesn't include interior finishes, as the units will be delivered in shell condition with buyers likely investing millions more to build them out.
"At that price range people expect a level of customization higher than other parts of the building," said Baumert.
But comparable sales at past super-luxe products may not apply to the Millennium, according to Pacific Market President Paul Zeger, who markets and sells One Rincon Hill. The sheer number of for-sale units in the Millennium -- 419 versus 142 in Four Seasons and the 102 in the St. Regis -- will test the level of demand well above the $3 million mark.
"They are applying a New York model to San Francisco and the challenge is they have an awful lot of product," said Zeger. "How deep is the market for people who want to pay between $2 million and $6 million for that kind of product? The answer is: we don't know yet."
Zeger said the units on the bottom half of the Millennium will in fact compete with the cheaper Infinity and One Rincon, both of which are largely sold out.
"The question is, do you want to be at the top of the One Rincon or the bottom of the Millennium?
While Zeger thinks the lower floors will be a hard sell, the Millennium name should draw some buyers.
"There is a huge international market that knows Millennium from New York, Boston, and Florida and can afford those prices," he said.
Millennium advocates says that with a residents-only L.A. Sports club and an amenities floor more lavish than any of the city's hotels, the tower will offer everything that the best hotels have. But rather than sharing the facilities and 24-hour concierge services with out-of-town hotel guests, Millennium owners alone will have access to them.
In addition, the view on the top half of the building will be much better than the shorter St. Regis and Four Seasons, Nelson said.
"You take the Four Seasons and add 20 floors and it would be comparable," said Nelson.
The Millennium is not taking any chances when it comes to sales staff, Baumert said. In addition to Nelson, Millennium tapped Bryant Kowalcyck, who headed up the sales efforts at the St. Regis Residences, and Jennifer Xu IIes, a top producer at the Mark Co., which is selling the Infinity.
David Barrett, who sells high-end properties for Warwick Properties and currently has seven listings near or above $10 million, said the Millennium penthouses "could very well command those prices."
"It's very aggressive but there is a pent-up demand for large penthouses in San Francisco," he said.
He sees the downtown towers, especially the Millennium, as attracting retiring baby boomers as well as young tech entrepreneurs from Silicon Valley and the city.
"There is a whole new generation in San Francisco that wants to stake their claim using their own fortunes," he said. "New areas are being claimed by new groups."
[email protected] / (415) 288-4971
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Source: http://www.bizjournals.com/sanfrancisco/stories/2007/11/05/story2.html
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