Long-Time SF Tenants Receive $475,000 Buyout to Move from Apartment
Despite San Francisco real estate being an anomaly compared to several other real estate markets, it never seizes to surprise locals.
When one couple was offered a $475,000 buyout to move out of the apartment they have lived in for three decades, it certainly got plenty of attention on social media and from residents.
As reported on KPIX5 CBS, the voluntary buyout is the largest in the city’s history and reflects the apartment’s high value.
The tenants, who are a couple in their 60s with teenage children, were recently paying $12,500 a month for a seven-bed, eight-bath apartment. Taking up most of a floor in a century-old building, it features extensive views of the bay, Golden Gate Bridge and Presidio park.
Having one of the strongest tenant protections in the nation, tenants who live in San Francisco tend to stay in their apartments for a long time as market prices rise. The state recently adopted rent control and other tenant protections, but San Francisco approved its rent control ordinance in 1979 to alleviate the city’s housing crisis.
Therefore, landlords can only raise rent on some properties a certain amount annually, with the current increase at under 1%. Owners who want to move into their own single-family home have to pay tenants to vacate. The maximum amount tenants in one unit can receive to relocate is $22,000, with an extra $5,000 for households with minor children or seniors 60 and up.
In this particular case, relocation costs did not apply. Instead, the landlord and renters reached a voluntary agreement for them to vacate.
Steven Adair MacDonald, the couple’s attorney, said reaction has been divided to a six-figure buyout that is enough to buy a home in most parts of the country.
“Landlord attorneys think it’s an outrage, and on the tenant side, everybody’s excited, they think it’s great,” he said.
But MacDonald believes the landlord is the winner since he will be able to rent the apartment for $25,000 a month and get the buyout amount in just over three years.
“After that, it will be gravy, so it’s a great investment,” said MacDonald.
MacDonald is also suing Friedman Properties on behalf of “fairly well-heeled” tenants in several other units who have moved out since March due to the ongoing noise and dust from ongoing renovations in the building.
KPIX requested the landlord’s attorney David Wasserman for comment on the buyout.
He said that constructive eviction was never the landlord’s intent, citing that the landlord scheduled much-needed renovations and maintenance projects before the pandemic.
Over 300 tenant buyouts were filed with the San Francisco Rent Board in 2020. MacDonald said average buyouts are $50,000, and they are growing taking into account the difference between market rent and length of tenant residency.
While San Francisco rents went down during the pandemic, they are still among the highest in the country. The average rent for a one-bedroom unit is $2,750, according to Zumper, a rental platform. The median sales price for a house is $1.5 million, according to Redfin.
Tenants groups say that working class residents would need to move out of San Francisco if rent control was no longer in place.
“Paying a half-million dollars to a wealthy person who’s been keeping a rent-controlled apartment in a city with a housing shortage and an affordability crisis kind of speaks to the way in which our local rent control distorts the market,” said Charlie Gross, who handles government affairs for the San Francisco Apartment Association.
Call Window Replacement Center Today At 415-926-2427
With a little above the two-thirds majority necessary to become law, a ballot measure from last Tuesday’s election to tax vacant storefronts along major commercial corridors in San Francisco is set to pass.
As reported in the San Francisco Business Times, the “vacancy tax” would go into effect on Jan. 1, 2021, and impact building owners or tenants in certain areas of the city who do not activate vacant commercial storefronts for more than 182 days in a year. The tax would start out at $250 per street-facing foot in the first year of a vacancy, but would be raised each consecutive year if the property stays vacant.
In 2022, for example, owners or tenants would need to pay a tax of either $250 or $500 per-street-facing foot if the space was kept vacant in the previous year. And from 2023 on, a $250, $500 or $1,000 tax per street-facing foot would be levied, depending on how many years prior the space was kept vacant.
Tenants or subtenants with a two-year-plus lease agreement who have operated a business in the leased space for at least 183 consecutive days would not be taxed for having the space vacant, and nonprofit organizations are also exempt. The tax would apply to about three dozen commercial districts and major corridors in San Francisco, but not in the Union Square area, which is the city’s main shopping district.
Opposed to the tax measure were the San Francisco Chamber of Commerce of which the Chamber President and CEO Rodney Fong said the organization is hopeful for “future incentives” that will encourage small businesses to open shops in San Francisco, where they already deal with challenges.
“We still think that small businesses are the backbone of San Francisco from a real estate perspective, but also (in regard to) job creation and that middle income,” said Fong. “But it’s so difficult to go through the (city’s) permitting process to open a business. I believe there are 114 potential permits to open a business in San Francisco — there are many hoops and hurdles.”
“We are looking for other incentives and ideas other than taxes,” he added.
Supporters of the measure included Mayor London Breed, Sen. Scott Wiener, Assemblymember David Chiu and the San Francisco Board of Supervisors.
“I’m thrilled that San Francisco voters saw the wisdom in this tax which was designed to activate dormant, blighted storefronts in neighborhood commercial corridors across the city and to give small businesses a leg up in negotiating fair rents,” said District 3 Supervisor Aaron Peskin, who authored the measure, in a statement. “To the small business owners and merchants associations who believed in Proposition D, this is the beginning of a set of reforms that the Board of Supervisors will be undertaking to help small businesses survive and thrive.”
The vacancy tax revenue will go into a new fund to support small businesses, which is expected to raise up to $5 million annually.
In 2018, Supervisor Sandra Fewer introduced legislation that required the city to accurately track the number of vacant storefronts.
Fewer said Prop. D is “meant to be a behavior changer, not a revenue producer.”
“The threat of this tax will give small businesses the leverage they need to push commercial landlords to renegotiate fair leases, bring down rents to reasonable levels, and activate more of their vacant storefronts,” she said.
In response to concerns that Prop. D could inadvertently hurt small businesses, Lee Hepner, Peskin’s legislative aide, said safeguards were built into the measure, including:
- The Board of Supervisors may amend the vacancy tax by a two-thirds vote, which could include reducing the tax and/or its geographic scope to respond to market needs or a recession. The board can also vote to repeal the tax completely.
- An amendment added to the measure by Supervisor Fewer provides that if a business operating in a storefront for at least six months goes out of business before the terms of its lease are fulfilled, the tax would not be assessed for that property for the rest of the lease term.
- Since Prop. D’s proceeds are dedicated to the operation and maintenance of small businesses, those funds can be repurposed or refunded if the assessment causes harm to a small business.
Call Window Replacement Center Today At 415-926-2427
As reported recently in the SFGate.com, when the owners of 2 Casteneda Ave. remodeled their 1926 Forest Hill residence, they pulled out all the stops on the outdoor space of their quarter-acre property.
Aside from adding more Southwestern-style plantings to go with the “Pueblo-style” facade, they also have a fountain and a recessed patio complete with heat lamps, custom lighting, and an outdoor sound system. When you look up from the patio, you’ll get a nice view of the drought-tolerant plantings on the living roof.
The outdoor kitchen has a barbecue, smoker and a wood-fired pizza oven. Also in the backyard is a turfed basketball court.
“The sport court surface area needed to have some density to enable the kids to play basketball,” explained sales agent Cece Doricko of Coldwell Banker. “The owners preferred short-cut turf to concrete or other sport court surfaces.”
Now that their children have grown, that sports court isn’t being used like it was in the past and the owners have decided to pursue their dreams of living in wine country, Doricko said.
“They’ve loved their home in the city, but it is now the right time to make the move,” she said.
They are asking $4.3 million.
Doricko said that the owners began their work on the outside of the home right after moving in in 1998, but the biggest and last renovation came in 2012. On top of all the work in the backyard, they also replaced the facade’s “faux adobe” stucco with a more authentic plaster.
“They aren’t quite sure of the origin of the Pueblo style of the home but they have done everything they can to preserve it and enhance it,” she said. “This includes a new perimeter fence that has a more southwestern flair and plantings that “add a touch of Santa Fe to the property.”
The Santa Fe theme can also be seen throughout the house, where the family room has rounded wood beams and a wood mantel with metal accents over a gas fireplace. There’s also a formal dining room and remodeled kitchen with heated slate floors. One bedroom, one full bathroom and one half bath complete the main level.
The other three bedrooms and two full bathrooms are upstairs with the rooms at the back of the house overlooking the living roof and the backyard entertainment.
The lower level has more space to entertain, including a billiards room and practical amenities such as an office, laundry room and access to the two-car garage.
“The current owners lovingly created a perfect space for entertaining and everyday living,” said Doriko. “The quality of the extensive upgrades coupled with an extraordinary lot is what makes this property not just a home, but an estate.”
Call Window Replacement Center Today At 415-926-2427
For those living in San Francisco, Oakland or Hayward, there is a 4.8 percent chance it takes you over an hour and a half just to get to work, and another 90 minutes or so getting back home. That means around 95,600 people are crowding onto BART trains and who are congesting highways daily, according to a new study on working trends.
As reported in SFGate.com, your commute is possibly a little better in the South Bay. According to the Apartment List study, compiled from 2017 American Community Survey microdata, 3 percent of folks in San Jose, Sunnyvale and Santa Clara take more than 90 minutes to get to work. The study did not include data for the North Bay or greater East Bay.
Stockton and Lodi, located nearly 80 miles east of San Francisco, have the highest share of super commuters (people with one-way commutes over 90 minutes) in the nation: over 11 percent of their combined populations.
Modesto, 90 miles southeast of San Francisco, falls just behind Stockton, with 8.7 percent of its population on the road more than 90 minutes to work each day.
The study doesn’t specify where the Stockton and Modesto residents are traveling, but they most likely are headed to the Bay Area, the closest major job hub.
The data is not so surprising. The Bay Area, with its high-paying jobs and huge housing costs, is where super commuters head to, a phenomenon that has increased throughout the area in recent years.
Per the national average, super commuters earn 20.9 percent more than the median American worker employed full-time with a commute under 90 minutes. The study also found that the highest earners are significantly more likely to have a super commute. One in 23 people making more than $100,000 in the nation are considered super commuters.
It’s possible that super commuters are statistically more likely to own their homes, and “unique commuting patterns may be driven either by a desire to purchase a home or remain in one’s home, even as job opportunities arise,” the study’s authors write.
Call Window Replacement Center Today At 415-926-2427
As recently reported in Forbes, San Francisco’s newest public urban park, Salesforce Park, which is on Mission Street, South of Market, is considered prime real estate.
The 5.4-acre rooftop park that is on top of San Francisco’s new regional transportation hub, Salesforce Transit Center, which connects eight Bay Area counties through eleven transit systems, is officially open.
Designed by international architecture firm Pelli Clarke Pelli Architects, the center project cost $2.26 billion, incorporating local, regional, state and federal funding.
Similar to New York’s Bryant Park, Salesforce Park is becoming a lively part of the community. Designed by PWP Landscape Architecture, Salesforce Park includes 13 gardens, a large lawn with older trees, moveable tables and chairs, children’s play area, and an 800-seat amphitheater for concerts.
There is also a half-mile walking/jogging trail. A restaurant is even being planned for the park. Plenty of free events and programs for all ages and interests are available.
“I think looking at Salesforce Park as a real estate asset is the proper way of viewing it. It’s a public open space in a city that lacks park spaces for residents, workers and visitors,” notes Mark Zabaneh, executive director of the Transbay Joint Powers Authority.
Dan Biederman, president of Biederman Redevelopment Ventures, the company managing Salesforce Park, knows how to run successful urban public parks. In 1992, BRV did well with the redevelopment of the crime and drug-dealer-infested Bryant Park in New York’s midtown.
“As Bryant Park added value to the adjacent real estate, we expect to see the same from Salesforce Transit Center and Salesforce Park,” observes Biederman. “What we are doing here has not been done in San Francisco. All the programming we have in place now and in the future will make this a lively safe space the community wants to spend time at and draws people to live near there.”
According to the bryantpark.org website, “The park’s upgrade has generated over $2 billion in incremental real estate value for its 33 abutting properties.”
Currently, a 650-square-foot one-bedroom condominium overlooking Bryant Park is listed at nearly $1 million.
Real estate professionals in the Bay area expect Salesforce Park to increase the desirability of the local real estate and the community in several ways. Matt Lituchy, chief investment officer for Jay Paul Company, developer of the mixed-use 181 Fremont said, “As one of only two buildings that connect directly to Salesforce Park, we feel it is an important amenity for both our residents and office tenants and one that improves the quality of life for the entire neighborhood.”
Charles Clinton, CEO of EquityMultiple, a commercial real estate investment startup, lives in San Francisco.
“Significant developments, particularly those that drive attention and foot traffic, can provide significant value to the surrounding neighborhood and help drive up local real estate prices in the process,” Clinton explains. “The neighborhood surrounding Salesforce Park has already undergone an enormous wave of change and development. The park should help continue this trend and create a similar halo effect for surrounding real estate values to what we’ve seen with similar major projects in other cities,” Clinton adds.
Salesforce Park’s overall success depends on the park’s on-going programming, according to Biederman.
“You need active programming to make sure the park is always busy with both tourists and nearby residents. For those residents, we hope they make visiting the park a part of their daily routine.”
That’s the news needed to attract attention to the area and spur additional development.
Call Window Replacement Center Today At 415-926-2427
Still considered “red-hot,” San Francisco’s real estate market continues to close on homes quickly and a median home price is easily over $1 million.
But despite expert predictions, the market does not seem to be slowing down much, as reported in the San Francisco Business Times.
Noting median wage and real estate employment growth, WalletHub has named San Francisco the Best Place to be a Real Estate Agent for 2018.
The personal finance site compared over 170 U.S. cities across 18 key indicators of a healthy real-estate environment ranging from sales per agent to building permit activity to home turnover rate.
Patrick Carlisle, a vice president and chief market analyst for Paragon Real Estate Group, indicated some key distinctions that make San Francisco’s market stand out from the rest of the country.
“One of the challenges in San Francisco is how complicated the market is,” Carlisle said. “We have single-family home, condos, TICs, co-ops, then we get into rent control and anything to do with tenants is not just complicated, but dangerous if you’re not doing the right thing.”
He also said that clients in San Francisco have higher expectations than in other markets, demanding more tech-savvy agents in communication, marketing and data analytics.
“The level of sophistication here is unlike anything else, when you are a very, very bright entrepreneur that has succeeded you have a certain level of expectation of the people you hire to meet your needs,” said Pacific Union real estate agent Steven Mavromihalis. “What that level of expectation has done is it’s brought a higher and higher level of service within the industry.”
With some of the highest housing prices nationwide, it’s not unusual for top real estate agents to gross over $1 million a year and several agents earn well into the six-figures.
According to Carlisle, those financial incentives have created an extremely competitive environment where top executives in fields like finance, law and business have entered the business.
“At the same time you’re putting together multimillion dollar contracts, you’re preparing a home to show,” Carlisle said. “Being a real estate agent in San Francisco is sometimes like stapling five or six careers together that don’t really have much coherence.”
Another big difference is that real estate agents just need to do a few deals to be successful in San Francisco.
“While in some markets you’ll see top agents do literally hundreds of deals, because of San Francisco’s high housing prices, agents only need 10 to 12 deals to be in the top 10 percent and make a very good living,” Carlisle said. “However, there’s ferocious competition to get those deals, especially in the higher price ranges.”
Carlisle entered the real estate industry in 1989 and has seen many changes through the years including new online tools offering services to potential homebuyers.
“The only way real estate agents could compete is to reduce the cost of hiring an agent,” said Mehdi Barati, professor of economics at the University of Southern Mississippi in the WalletHub report. “Price is and always has been the No. 1 factor in the decision-making process regarding purchasing a good or a service.”
Call Window Replacement Center Today At 415-926-2427