Local development is stagnating appreciation value at One Rincon Hill
One Rincon Hill, a luxury development on Rincon Hill in Downtown San Francisco is experiencing what most buildings of its age do, a stagnancy in appreciation value.
Built in 2008, after a decade plus of homeowners enjoying the Rincon Hill lifestyle, the building is starting to age. It’s ironic that ten years can make a building old, but with the rampant high-rise growth of South Beach, Mission Bay, and The East Cut districts of San Francisco in the past decade, buyers expect Brand New.
In 2018, One Rincon Hill saw 18 sales, averaging $1,429 a foot across the building. Comparatively, this price per square foot value is still one of the highest in the surrounding area, yet that value has been stagnant since 2015. With buildings such as 181 Fremont, LUMINA, and The Harrison all finishing construction in recent years, with The Avery and Mira on the way, the market has been saturated with supply, and ultimately newer options.
Since 2015, One Rincon Hill has sat relatively steady between $1,412 — $1,435 a foot, with a huge year in 2016 where the building jumped into the $1,500’s a foot range (mostly due to multiple higher floor view units selling). However, the influx of supply in the higher price points in the last few years suggests this price will sit steady, if not slightly decline due to age. All new developments tend to face a sharper appreciation curve compared to the local market appreciation but rarely do they stagnate, or decline.
What the developer Urban West Associates, spearheaded by architect Solomon, Cordwell, Buenz and Associates, pushed hard on the San Francisco market in 2008 was smaller square footages in units, particularly in 1 bedroom or studio units. These 605 sq/ft units serve multiple functions in terms of building value — the low square footage coupled with the high local property value tends to throw the price per foot higher than other buildings, yet the smaller square footage has proven to be challenging to sell — buyers in the market have shown to demand more space. Should these smaller units continue to sit on the market for 75+ days, other owners in the building will be affected in terms of perceived building value.
However, there is ALWAYS a way to entice buyers and revamp the resale value — Renovating!
An updated kitchen or bathroom can make a world of difference to a pool of potential buyers, especially if they are comparing the brand new feeling of The Avery, or the lightly used features of Tishman Speyer’s LUMINA. Buyers ultimately decide the market’s value, and all homeowners were at one point in time; Buyers. The best recommendation I have for homeowners at ORH thinking about selling is to keep a close eye on which local buildings are generating the most sales, with the shortest Days On Market, and mirror the vibe of similar units in those buildings. After all, the market is telling you what’s selling, and why, all we do as Realtors is listen.