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Empty S.F. office tower formerly valued at $62M sold for $6.5M
- Skunkleton 3y agoWait so I can get a huge office building for the cost of three mediocre single family homes?
- inferiorhuman 3y agoTurn that on its head: what kind of huge office building is only wroth $6 million? A really crappy one. Based on personal experience with that building I'd rather have 3x SFH.
- Lammy 3y agoIt's the location — 6th & Market (well more like 6th & Jessie) is the roughest block in the city. Rougher than anywhere in the TL.
- inferiorhuman 3y agoThe entrance (and thus the address) is on Market – 995 Market. It sits between Market and Stevenson. Jessie is a block closer to Mission, and yeah 6th and Mission has a reputation. It's zoned for mixed use (although the donut shop on the ground floor left years ago and I'm pretty sure that space has been vacant for a few years). It's in between Powell and Civic Center stations. It's a pretty decent location, with some great food and entertainment near by although the fancier restaurants closed ages ago. It's basically across the street from the Golden Gate Theater and the Warfield. The neighborhood is what it is. IKEA and their new, popular, food hall is less than a block away. Looks like there's some hipster dofus AI incubator right there too. The building itself just wasn't well maintained. Last I saw you were far more likely to get trapped in the elevator than mugged.
- Lammy 3y ago> The neighborhood is what it is. I did go out of my way to describe it as “roughest” and not “worst”. Least compatible with the image of perfection projected by the typical tower-dwelling corpo? :) In fact I have a lot of fond memories from the mid-2010s of stopping by the weed lounge on Jessie for a Volcano bag and a few floors of Isaac Rebirth on my PSVita any time my afternoon train was significantly delayed. Alas that just closed too for the same reason: https://sfstandard.com/2024/02/02/san-francisco-cannabis-dispensary-bloom-room-closes/ https://sfstandard.com/2024/02/02/san-francisco-cannabis-dis...
- foolfoolz 3y agogoing from sixth and market down to mission st is quite a walk
- deleted 3y ago[deleted]
- shrubble 3y agoWhat are the taxes per year?
- srockets 3y agoBecause of the infamous prop 13, commercial real estate taxes in California are in practice capped at 1980s valuations.
- toast0 3y agoA foreclosure auction is an ownership transfer that triggers a reappraisal. So this building will likely see a big jump (unless it had an uncapled appraisal recently). Most likely the appraised value will be more than the foreclosure sale price, as a foreclosure sale doesn't meet the free market value conditions. The sale was forced, and buyers don't have time to complete due dilligence between the announcement and the sale.
- inferiorhuman 3y agoAround 2% of the sale price in perpetuity.
- hibikir 3y agoIn downtown St. Louis, ATT tower sold for half of that, right there in the middle of downtown. Sold for 200 million in 2016. So, if we go by office buildings that have sat unoccupied for a while, SF is still maintaining good value.
- acchow 3y agoYou can’t. They also assumed the debt against it
- tarikjn 3y agoI am not sure this is the correct take, they happened to have assumed the debt prior. But the building was sold independently for this price at a public auction. They had to do this to find the fair value of the building to deduct it from the debt. You could have bid 6.57M and won if no one bid after. Now they own the building and the remainder of the debt.
- toast0 3y agoMy understanding is this was a foreclosure auction and that the lender bought it (but I'm not actually sure if it was the lender, because articles are saying it was the 'special servicer). At California foreclosure auctions, my understanding is the lender will usually bid up to the loan balance or their estimate of what they can sell it for with some marketting and time. That it sold for $6M to the lender tells you that nobody was prepared to make an offer on it given the time constraints, not that the fair market value is $6M. The lender will operate it and prepare it for sale and buyers will be able to take their time to do due dilligence etc, and most likely it will sell for somewhat more than $6M. The purpose of a foreclosure auction include clearly establishing a change of ownership. If the lender pursued judicial foreclosure and a deficiency judgement, the fair market value will be litigated some time after the sale, and the borrower may need to make up the difference between the loan balance and fair market value.
- dehrmann 3y agoYou don't want to see the utility and maintenance bills for a building like that.
- kioleanu 3y agoit's just water and gas Michael, how much could it cost?
- raincom 3y agohttps://archive.is/bfgxC https://archive.is/bfgxC
- bsder 3y agoHow the hell do you default on a $45 million loan at the same time while buying another property in the same area for $27 million? This is the kind of stuff that pisses everybody off. The hoi polloi get raked over the coals for college loans while the haut monde blithely skip right past $40 million in debt.
- garte 3y agoReal estate is the messy underbelly of capitalism. Since only debt (= mortgages) creates money (and growth) you have to cut them some slack. The economy won't work if you're asking too many questions.
- JumpCrisscross 3y ago> Since only debt (= mortgages) creates money Mortgages aren’t only one among many phyla of dollar-denominated debt, they‘re not even the biggest [1][2]. And fiscal spending can create new money without debt. Debt is the monetary channel’s mechanism. [1] https://www.statista.com/statistics/274636/combined-sum-of-all-holders-of-mortgage-debt-outstanding-in-the-us/ https://www.statista.com/statistics/274636/combined-sum-of-a... [2] https://en.m.wikipedia.org/wiki/National_debt_of_the_United_States https://en.m.wikipedia.org/wiki/National_debt_of_the_United_...
- garte 3y agoWouldn't fiscal spending devalue the currency since this money has to be "printed" instead of lent?
- anonuser123456 3y agoThe hoi polloi want their debt paid by the public. Private capital eats the loss here. kind of different.
- onion2k 3y agoUntil the next bank bailout when all that private debt is written off using government money anyway.
- neilv 3y agoHow hard would it be to convert that building to residential, and sell each floor as an unfinished apartment or two? (With ground floor for retail businesses that are generally appealing to residents of the building, such as a cafe.)
- jdlshore 3y agoMy understanding is that office buildings don’t usually have the windows, ventilation, or plumbing required to support apartments. A retrofit would be expensive and would leave you with a ton of cave-like rooms in the interior.
- JumpCrisscross 3y ago> would leave you with a ton of cave-like rooms in the interior I get into this debate every time this comes up, but this was my (illegal) first apartment in New York. It was great. It’s prudish tendencies like outlawing apartments with no windows that force folks like me, who would put black-out curtains anyway, to compete for housing with families who do need natural light. All while an office building lies vacant.
- alex_lav 3y agoYes, simply rollback habitability requirements for tech workers. What could go wrong?
- MenhirMike 3y agoCould name the building "Grenfell Tower S.F.".
- closeparen 3y agoYou do not ever, under any circumstances, get to credit yourself for promoting "habitability" in a city where adults routinely need roommates.
- 3y ago
- sakopov 3y agoIn a similar fashion, an office tower in Saint Louis which was valued at $205M in 2006 recently sold for just $3.6M [1] [1] https://www.costar.com/article/642008108/one-of-st-louis-tallest-office-towers-empty-for-years-sells-for-less-than-2-of-its-peak-price https://www.costar.com/article/642008108/one-of-st-louis-tal...
- sien 3y agoFrom : https://therealdeal.com/sanfrancisco/2024/04/23/how-low-lnr-buys-sf-office-building-for-11-of-2018-price/ https://therealdeal.com/sanfrancisco/2024/04/23/how-low-lnr-... The key thing is that the buyers had already taken on the loan against the building. Quote : "The mostly vacant building was auctioned off eight months after Bridgeton Holdings defaulted on a $45 million mortgage loan. The investor bought the tower in 2018 for $62 million, or $685 per square foot. LNR, a unit of Connecticut-based Starwood Property Trust, had been acting as special servicer for the $45 million loan. The LNR affiliate took over the loan this month from the original lender, Dallas-based LStar Capital. Bridgeton, which told lenders last summer it would stop payments on the loan, owed more than $47 million by the April 18 auction. Because it had taken over the loan from LStar, LNR could have simply credited the $6.56 million auction bid against the more than $47 million Bridgeton owed on the building, instead of plunking down cash at auction, according to the Business Times. " So really the reduction is vastly less than is stated in the headline.
- 55555 3y agoIt's so tiresome. These headlines/tweets are literally written daily, and the trick is always the same.
- aaron695 3y ago[dead]
- tarikjn 3y agoWhat difference does it make? It cost them more than $6.56M in the end but to deduct the building at a fair price they had to auction it and nobody bid higher than that.
- relaxing 3y agoThe difference is a foreclosure auction isn’t an accurate measure of value.
- 0cf8612b2e1e 3y agoIs there such a thing as scrap value for a building? If you tear it down are there any materials worth scavenging or is the only real value in the land?
- 55555 3y agoYes, there is. >> For example, the Deutsche Bank Building in New York, demolished in 2011, contained about 40,000 tons of structural steel. At that time, scrap steel prices averaged around $200 per ton, yielding an estimated $8 million from steel alone.
- randycupertino 3y agoIt's on the corner of 6th and market. Kinda scuzzy area unfortunately.
- dehrmann 3y agoThe TL has a de facto annex one or two blocks down 6th into SoMa.
- punkbit 3y agoSome people believe that it’s hard to convert office space into housing. Meanwhile there are people living inside sewage tunnels, cars, the concept of guardians in the UK (who live in office spaces), etc. I’d be extremely happy to have any of those “hard conversion” offices to live. Naysayers should mind their own business and stop believing in nonsense.
- throwaway11460 3y agoNone of these are legally housing or residence. The problem is regulation, not that it's practically impossible to live in that space.
- relaxing 3y agoLiving in sewage tunnels and cars is also against regulation.
- throwaway11460 3y agoSure, but these people are not asking. If somebody finds them, they're stopped (there are legal overnight parking spots but less and less). Same thing with houses, only it's much more easily visible and the investment and fines are too much to just try.
- benterix 3y agoFor people who can't read the article: just turn off JS and everything works fine.
- offsky 3y agoI wonder what the annual maintenance, utilities, taxes and other upkeep would be on that.