So whether your plans are dancing the night away or eating some of the best Mexican fare in the city, stop by to view the new Marlow Sales Gallery, find out the next release of residences and drink a tasty margarita on us.

Marlow Sales Gallery
1649 Polk Street
p: 415 674 1800
Open Everyday 11a – 5p

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For more information, visit http://www.oaklandcatvidfest.com/

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At 10:01, the phones at the sales office started lighting up — more than 100 calls came in that day and appointments were made with 200 potential buyers and brokers. By 8 days later, the first release of condos in the 1800 Van Ness building — some 18 units — had been sold out at an average of “well over” $1,000 a square foot. “We don’t even have signage on the building yet directing people to the sales office,” said Oyster Development Corp. President Dean Givas.

For Oyster Development the burst of sales activity is not only an indication that Marlow, which will be completed in early 2014, will be a financial success, it also helps set the stage for the another 400 units that Oyster Development has in the pipeline. Givas said he will start construction in July on 2558 Mission St., a 114-unit project next to the New Mission Theater. And next year Oyster will follow with a 282-unit development at Pine and Franklin streets.

The sales office at Marlow, which sits on Polk Street around the corner from the construction site on Van Ness, reflects the broader goal of building a brand, Givas said. The sales office cost $500,000 to build out. It includes a model unit and interactive screen that allows potential buyers to see floorplans and views by touching a unit.

“We didn’t spend this money because we were worried about the ability to pre-sell,” said Givas. “The market is ripe for that. We spent the money on the technology and sales office to elevate the buyers’ experience and to set expectation for our upcoming projects. There is a desire to brand ourselves, and hopefully we will accomplish that.”

In 2010, Oyster Development started picking off housing sites at the bottom of the market. But unlike the real estate investment trusts and private developers who were underwriting their land deals as rental units, Givas was an 100 percent believer that San Francisco’s for-sale condo market would come roaring back. It wasn’t an easy sell.

“He had the foresight to secure these properties at a time when most people had forgotten how to spell condominium,” said Garrett Frakes, a partner with Polaris Pacific, which is handling marketing for Marlow.

While Oyster Development is San Francisco-based, as are contractor Build Group and architect Kwan Henmi, the team also has a heavy Toronto accent. Oyster’s equity partner on all three projects is Toronto-based Tricon Capital Group. And while planning Marlow, Givas went to Toronto in search of more talent, hoping to take advantage of that city’s position as the No. 1 most prolific condo development market in North America. There, Givas signed on two Toronto firms: interior designer II by VI and Design Shop, which is responsible for Oyster’s renderings, animation, and sales office interactive technology.

“Toronto produced 18,000 units last year and it’s a market that pre-sells 75 percent of its units before construction starts as part of financing requirement,” said Givas. “There is a lot of emphasis on branding and a lot of emphasis on competition. It’s a benefit to be able to leverage that experience, the competitiveness in that market.”

Frakes said that the demand at Marlow is more measured and reasonable than the frenzy of 2005 when buyers formed lines around the block for projects like 88 Townsend. “We have seen this before and there are some uncomfortable memories related to it because at the time it was a reflection of loose credit standards as much as anything,” said Frakes. “The nice thing about this market is the demand is more tied to a strengthening economy and high-income jobs.”

There are currently fewer than 100 new condos on the market in San Francisco. The only other new project that has opened a sales office is the 62-unit 300 Ivy in Hayes Valley. Marcus Lee, sales director at Climb Real Estate, has two clients in contract on units at Marlow and another five looking at it. “It is expensive, but the whole market is on fire. Demand is outstripping supply by such a significant margin, the question is how high are prices going to go?” he said.

Lee said the $1,000-plus prices are hard to swallow, but concerns are assuaged by the fact that neighborhoods like Russian Hill, Lower Pacific Heights and Nob Hill are so difficult to develop in. The three neighborhoods have averaged about 50 new condo units a year over the past decade. “There is something to be said for the combination of a new, contemporary building in a classic, old-world neighborhood.”

So far, 80 percent of the buyers live in one of the immediate surrounding neighborhoods. While many new developments in Mission Bay and Rincon Hill sell the neighborhood as much as the layouts, Oyster is taking a low-key approach to Marlow.

“These are exceptionally established communities and the people who live in those communities are really partisan,” said Frakes. “Socially and economically, they are significantly involved in their neighborhood. We don’t want to be patronizing to people who have lived there for 10 or 15 or 20 years. We tried to be subtle and deferential in terms of presenting the neighborhood.”

Givas said that Oyster is dedicated to contemporary design and efficient units that are smaller than the units in many projects. “I believe this is a very expensive city to live in and you have a larger pool of buyers if you have a lower gross price point,” he said.

Ross Edwards of Build Group pointed out that Oyster Development has picked the same team for all three of its projects. “Dean demands a lot of himself and his teammates but is incredibly loyal.”

J.K. Dineen, San Francisco Business Journal
Source: San Francisco Business Journal

View the Marlow website >>

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A few weeks after the Jay Paul Co. paid $75 million for 181 Fremont St., Fritzi Realty has tapped Colliers International to market 41 Tehama, a 19,275 square foot lot currently used for parking. The parcel is entitled for a 31-story, 341-unit residential tower. Arquitectonica is the architect on the project.

The site could fetch about $48 million, or $140,000 per buildable unit, according to sources. That would represent a significant increase over the $100,000 a unit that Essex Property Trust and Avant Housing are paying for Block 9 in the Transbay earlier this year. The small family-owned Fritzi Realty, led by Bob Tandler, has also filed an application to increase the height to 360 feet, which is allowed under the zoning. The additional space would add four floors to the tower and could increase the number of units to 398, according to public documents. The building will also have a three-level subterranean garage.

The marketing flyer states that the project will “feature stunning 360 degree views and an expansive outdoor plaza surrounded by the Transbay Terminal Oscar Park connecting 41 Tehama Street to the Transbay Transit Center.”

The husband and wife team behind Fritzi reality have owned the parcel for decades — it was the parking lot for the family’s former garment company. The family originally sought to build a 200-foot tower there, but then changed that to 550-foot tower in an effort to jump on the Transbay Transite District upzoning. But planning officials objected and Fritzi ended up somewhere in the middle.

Chris Foley, a partner in Polaris Pacific, which consulted on the project, said 41 Tehama “is basically the closest thing to shovel-ready out there.”

“The ownership did a great job working with design team to make a elegant building,” he said. “If you don’t mess around you could start construction in nine months and deliver that building in 28 month into a market that has no inventory.”

Likely bidders include Avant Housing, Trumark Urban, Golub & Co., Westbank, Related Cos., and Crescent Heights. Foley thinks that the project will end up in the hands of a condo developer rather than an apartment real estate investment trust. “Construction costs are going up and rents are flat — the apartment window is rapidly closing unless you want a very low yield,” he said.

In the brochure Colliers International states that “41 Tehama Street represents the increasingly rare opportunity to acquire a fully entitled high-rise residential development site in the most rapidly transforming area of downtown San Francisco. The Project is poised to benefit from the tremendous infrastructural development in the immediate area, excellent access to the downtown core and public transportation, and the continued demand for luxury residential product in San Francisco.”

At an average of 750 square feet the units are smaller than Tishman Speyer’s 201 Folsom St., which will likely be its main competitor.

J.K. Dineen, San Francisco Business Times
Source: San Francisco Business Times

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Here’s what Chris Foley said about the merger, company culture, the San Francisco condo market and challenges for Polaris Pacific in the coming year.

How has the merger gone so far? The merger has been great because both companies brought different skill sets to the organization. Now we’re able to provide greater breadth and depth to our clients. It has been a fabulous experience.

When did you guys start working together? In January 2012, I met with Paul Zeger. I said we should think about merging. Paul said the culture and fit of the organization are critical. We spent four to six months talking about our philosophies, what we do, what we believe in. Then we shook hands and decided to work with lawyers.

In terms of culture, what did you discuss? We care about our people. We have a large team of people who are full-time. Even if they are not at a sales center for a few months, they still get paid, have benefits and aren’t worried about losing health insurance. The next part was how do we look at our clients. We believe in having a very long-term relationship with a client. It wasn’t about trying to do a transaction to make as much money as we could to the detriment of the client, but how can we do multiple transactions with the client over 10 or 15 years and build a solid relationship.

Did Paul Zeger agree with you or were there things that you had to work out? I’ve been with Garrett for 10 years. He can finish my sentences. Now I can finish Paul’s sentences and he can finish mine after two and a half months. It took time to understand how we were going to fit together, but we’ve never had conflict.

What else made you think this was the smart thing to do? We did this whole merger because it was good for our clients, for our people, and good for our company position. For clients, we can give them more resources. For our people, we can give them more opportunity. And for our market position, we have a $1.4 billion backlog of pipelines across California for condos.

What’s happening in the San Francisco condo market? In 2011, we put out about 500 pages of research looking at notices of default and foreclosures. After about three months of analysis, we realized that in mid-2012 the NODs and foreclosures had peaked and would be plummeting. The condo market would come back because the foreclosure market was fixed in San Francisco. We went to our clients and said the market is going to come back. You should get land and build condos. A lot of people said, we believe you, but after what happened, we can’t get the capital for that. In 2012, we sold a couple condo projects and then people began to believe us. This year there are fewer than 40 new construction condominiums in a market that historically absorbs 700 to 900 a year. In resale there is less than two months of inventory in the marketplace. Next year, 2014 will deliver 400-500 condos, and that includes pre-sales that will actually deliver in 2015. That’s still only half of what the market normally takes.

What can you do now as a business that you couldn’t do before? We employ more assets toward research and analysis. We are the premier research organization for sales and marketing on the West Coast. We provide new initiatives in technology that other people can’t. In the old days, you would do pay-for-click or Google-clicks. Now it’s actually understanding where the buyers are coming from and using technology to better target your market. That all translates into better feedback for your clients.

Who are your competitors? The Mark Co. has been around a long time. I respect Alan Mark and what he’s done, but we have 25 full-time people. We have three principals with over 100 years of experience. He has sold a lot of condos. We’ve sold even more.

What challenges will you face in the next year? The challenge is trying to figure out what’s the next thing on the marketing and technology side to interact with buyers and be able to provide better information to clients.

James Dunn, San Francisco Business Times
Source: San Francisco Business Times

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San Francisco, Calif. – Pacific Marketing Associates (PMA) and Polaris Group have now merged to create Polaris Pacific, the premier West Coast real estate sales and marketing firm. The contraction of the industry over the last several years forced many real estate firms out of business. PMA and Polaris Group secured strategic alliances with top developers allowing participation in the resurgence that is driving the residential markets in 2013 and providing an opportune time to merge entities. The company will be led by three industry veterans as Principals, Paul Zeger, Chris Foley and Garrett Frakes.

“With the merger of the two companies, Polaris Pacific celebrates over 30 years of legacy, experience and results for our clients. We continue to offer the latest marketing strategies, technology solutions, and up-to-date research,” said Zeger. “Together we are delivering the tools needed for the next wave of for-sale urban development.”

“Everything points to a strengthening real estate market,” said Foley. “Median price has continued to increase at a double digit pace in the San Francisco, Los Angeles and San Diego markets, investors are actively looking for opportunities and homebuyers are taking advantage of the low mortgage rates to drive demand back to prefinancial crisis levels. We have continued to demonstrate strong sales performance for our developer clients.”

Polaris Pacific has sold over 295 communities, secured billions in sales and delivered tens of thousands of keys to satisfied homebuyers. In 2012 alone, Polaris Pacific had 20 active new construction sales centers. “Our expertise through past success combined with our knowledge of current buyer sentiment and behavior gives us unmatched understanding of today’s market,” Frakes said. “We are deploying new techniques in both sales and marketing that are completely different than 5 years ago. We look forward to the new cycle and to bringing more value to our developer clients through our merger.”

About Polaris Pacific
With 30 years of experience, Polaris Pacific is the West Coast sales and marketing firm for high-density residential real estate. From land acquisition, entitlement and architectural review to brand development, market launches and cutting edge marketing technologies, Polaris Pacific analyzes each new property to consistently outperform competitors and maximize value at every step of the process. That’s why leading real estate developers and financial partners such as Canyon Capital Realty Advisors, Lennar Urban, Emerald Fund, The Pauls Corporation, Oyster Development, ULLICO, Citibank, Regis Homes, Paramount and Trumark Urban rely on Polaris Pacific’s unrivaled understanding of market intelligence, homebuyer dynamics and sales and marketing expertise. For more information, access to comprehensive market reports, and property case studies, visit polarispacific.com.

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“There’s been a tremendous creation of jobs here and huge demand for housing,” Nelson said. “There is a compelling, increasing demand for new for-sale housing in San Francisco.”

Their company, Trumark Urban, hopes to meet that demand.

In a city where most current construction focuses on rental apartments, Trumark Urban plans to build small and midsize condominium complexes – ranging from about 25 to 130 units each – in core areas around San Francisco, tailoring each complex to visions outlined in neighborhood plans.

Trumark has lined up six sites – in the Mission, Potrero Hill, Cow Hollow, South of Market, Nob Hill and Mid-Market – where it hopes to build 550 condos, ranging from 500 square feet to 2,500 square feet, and from $500,000 to $2 million, plus some below-market-rate units as required by the city. The first groundbreaking is set for spring; most would start construction next year.

Workers, retirees

By year end, it hopes to have identified more San Francisco real estate, with a goal of 1,000 condo units coming over the next few years.

Trumark is targeting two populations: Gen Y tech workers “who want to live in urban areas near their jobs,” and Baby Boomer retirees who prefer “walkable neighborhoods to Sun City-style senior housing environments,” Nelson said.

Gabriel Metcalf, president of the nonprofit San Francisco Planning and Urban Research Association, or SPUR, said Trumark’s vision sounds like a good fit for San Francisco.

“It’s a really neat thing they’re trying to do,” he said. “If they figure out how to make these small infill projects work, it will be a great contribution to the city. Most of the fabric of San Francisco is small sites. It’s one of the things that makes this city what it is. We want to have small-parcel builders be successful and fit into our neighborhoods.”

Of course, San Francisco’s notoriously difficult building-permit process and the challenges of securing capital mean there are no guarantees for any developer.

“We have always focused on high barrier-to-entry markets, and San Francisco is the epitome of that,” Hearing said. “We mean that in a good way; we don’t want to build homes in Texas. We like that there is a process here. It’s not easy to develop in San Francisco, especially not in the neighborhoods, but it’s where people want to live.”

Diversified strategy

In lower Nob Hill, for instance, a run-down auto repair shop “that is a blight on the block will turn into a phenomenal neighborhood amenity with a public art gallery in the alley,” in addition to 128 condos, Hearing said.

“We see an advantage to be diversified across several neighborhoods,” Nelson said.

The below-market-rate component for low-income people will range from 12 percent to 18 percent of total units, depending on location. Trumark said it’s letting the neighborhood plans guide it in whether the low-income units will be on-site or not.

Home building in San Francisco almost ground to a halt during the economic downturn – only 269 new units were built in all of 2011, according to SPUR. But that turned around in 2012, and now the city is having “the biggest residential construction boom that we’ve had in many decades,” Metcalf said.

The vast majority of current residential construction in the city focuses on rental units.

“There are 8,117 apartments in the pipeline in San Francisco right now to be delivered over the next three years,” said Chris Foley, a principal in the Polaris Pacific, a sales and marketing company that has done consulting for Trumark. “Less than 10 percent, probably just 7 percent, could potentially be converted to condos” because of how the projects are financed.

Large demand

By contrast, the condo pipeline offers slim pickings. Besides Trumark’s proposals, Foley said only a couple hundred condos a year are expected to be built in the city over the next three years. “The reality is there is almost no condo inventory in San Francisco, and the demand is very large,” he said. Nelson co-founded and is a principal of Trumark, the parent company in Danville. It has been doing residential and commercial development for about 20 years throughout California but has primarily handled land and entitlements, leaving the building to others. In 2008 it started a home-building division that does “soup to nuts” development and construction. It also has projects in San Jose and Milpitas.

It spun off Trumark Urban as a subsidiary based in San Francisco to manage the infill condo developments. Hearing is its managing director. Trumark Urban plans to develop in Los Angeles, San Diego, Seattle and possibly Portland.

Trumark expects its six sites in San Francisco will cost about $300 million for land, design, construction and marketing, while the planned 550 units would sell for about $400 million.

It has financing the projects internally so far, but it is conferring with some large equity partners, Nelson said.

By Carolyn Said, San Francisco Chronicle
Source: San Francisco Chronicle

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After six years of a complete halt on residential condominium sales, towards the end of 2012 investment sales for this type of property started to slowly recover in markets such as Boston, San Francisco and New York. The new year came with even more interest from analysts, investors for the now re-emerging condo market, their eyes being lured in by large residential and commercial developers that announced new condo development projects in areas that have been considered overbuilt markets, like South Florida or Las Vegas.

The increase in demand is confirmed as both overall US condominium investment sales volumes and the average price per unit for new condo projects have reached record levels in the fourth quarter of 2012, the highest in the past seven years, as shown by data from CoStar.

In Las Vegas alone, Ladder Capital Finance Holdings LLLP bought 427 luxury condo units at Veer Towers in the CityCenter project in December 2012. The properties were acquired from MGM Resorts International for $119 million. The deal was struck ”at a time when the Las Vegas housing market is seeing sustained improvement,” Tony Dennis, executive vice president of CityCenter Residential explained.

Picking up on the recovery signs, large homebuilders such as Lennar and Toll Brothers are also planning on developing rental apartments and for-sale condos as a means of diversifying their portfolios. Toll Brothers, a leading luxury homes developer, has officially announced a major push into the condo market, a move marked by the acquisition of a development site in downtown Bethesda, MD, where they plan to build a seven-story building with 60 luxury condominiums and underground parking.  They also plan to build luxury condos and retail space in New York, and acquired 953-961 First Avenue between 52nd and 53rd streets in the Midtown East area, and 82 King Street, between Hudson and Varick Streets, in SoHo, to accommodate their development plans.

Another major player, The Related Group, with their losses in South Florida still fresh in their minds, are also returning to the market, but are taking a cautious approach, while focusing on retail and office space developments in Miami. Related thus decided to buy a 1.3-acre high-rise mixed-use development site in Miami;s Brickell financial district for $18.5 million

New development projects have also been announced for supply constrained markets like San Francisco.  Trumark Companies acquired six sites where it will build mid- and high-rise condo projects, with more than 500 units planned. The project requires an investment of over $300 million.

But as Trumark principal and co-founder Gregg Nelson explained,  the demand for urban housing is on a rebound as the economy strengthens, more so in top tier markets like San Francisco. Yet up to now all new developments have been rental housing.

“We see an exploding opportunity, and an exploding demand, for for-sale housing in core urban areas because there’s almost a complete lack of supply,” Nelson said. Polaris Group data supports his idea of a non-existent supply, showing a forecast of 200 units per year through 2015 for new condominiums, and that is for a city with close to a million residents.

Trumark’s condominiums have a specific target in mind, younger tech company workers and retiring baby boomers who would trade larger residences for owning property in San Francisco, as explained by Michael Maples, who co-founded Trumark with Nelson in 1988.

The new demand for condos and the large number of development projects is the result of a recovering housing and job market in urban metro areas such as San Francisco and Boston. As rents are going up fast in some markets and mortgage rates drop, buying is once more becoming more sensible than renting.

By Alina Popescu / Realty Biz News
Source: Realty Biz News

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