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Another condo for sale
at the sinking
Millennium Tower.

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The 2,706-square-foot unit is priced at $5.6 million.

Another condo is being sold at San Francisco’s sinking, tilting Millennium Tower. The 2,706-square-foot unit #55A has two bedrooms and three bathrooms and is priced at $5.6 million. The listing shows more appetite for deals despite numerous lawsuits and unresolved foundation problems at the 58-story Millennium Tower at 301 Mission St. The building sunk 17 inches and leaned 14 inches to the northwest in the past nine years, more than anticipated.

Previous sellers have been willing to take a loss in the past two years, while buyers haven’t shied away despite the tower’s problems. In December 2017, unit #48B was sold for $2.99 million, 30 percent less than what the seller paid. Last year, penthouse unit #1A was sold at $5.75 million, down from $8.1 million in 2015. Penthouse #1A has the same square footage as unit #55A.

Price cuts have been uncommon amid San Francisco’s strong condo market, where the median price was up 9.3 percent in the fourth quarter to $1.17 million, according to brokerage Polaris Pacific. Ten units have been sold at Millennium Tower since reports of the sinking in August 2016, according to property records. Pricing ranged from $560 per square foot to $2,124 per square foot. Boca Raton, Fla.-based Mission Millennium LLC bought unit #55A for $3.23 million in November 2011, according to property records. The company is affiliated with Gary Marino, CEO of International Rail Partners LLC, a Florida railroad firm, according to property records.

The sellers spent additional money on an interior designer and extensive renovation, said Gregg Lynn of Sotheby’s International Realty, the sales broker. He previously represented the seller of unit #48B and the the estate of venture capitalist Thomas Perkins, which sold a 5,000-square-foot penthouse in the building for $13 million in late 2016. The unit #55A sellers live on the East Coast and rarely come to San Francisco – just a handful of days in the past three years, said Lynn. They had been considering a sale even before news of the sinking, and they’re comfortable where pricing has been in the past year, he said. Lynn said Millennium Tower still has an advantage over newer towers because it’s one of the few projects — along with the Four Seasons, Ritz Carlton and St. Regis — with an abundance of staff such as a private concierge. Staff operate a private dining room, fitness center, massage room and lounge for owners.

“Ten years later, there are very few buildings in San Francisco that are exceptionally well-run service environments,” said Lynn. “When you’re on the property, there are 50 people there working full-time.” Unit #55A has monthly homeowners’ association fees of $2,834 per month. Miles Garber, vice president of research at Polaris Pacific, said Millennium Tower benefits from San Francisco’s dearth of new condo supply. As of January, new development inventory was down 16.8 percent from the previous year to 669 condos, a sign that supply isn’t keeping up with demand despite numerous cranes in San Francisco.

“A lot of these buildings aren’t getting replenished,” said Garber. Garber said the completion of the Salesforce Transit Center and park this year will make Millennium Tower more attractive. However, Garber said it’s more difficult to find buyers because many lenders will refuse to provide mortgages for a building involved in litigation. That narrows the buyer pool. An effort to prevent more sinking and tilting is in the works. The Millennium Tower homeowners’ association will test drilling micropiles this summer to stabilize the building. The association could eventually drill 50 to 100 piles from the tower’s basement into bedrock at the cost of $100 million to $150 million.

It still isn’t clear if the micropiles will fix the building and who would pay for it. Multiple lawsuits between developer Millennium Partners, the city attorney, Transbay Joint Powers Authority and residents blame each other for the sinking problems. “We are pleased that the homeowners’ association is conducting its test pile program, which is an important step forward in the effort to protect the building from further harm … (the developer) has provided full financial support for the homeowners’ test pile program and it will continue to support any efforts by the homeowners to develop their proposed fix for the building,” said P.J. Johnston, a spokesman for the developer.

Read it at San Francisco Business Times

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