It might be the coldest SF summer in decades, but downtown’s ultra-luxe condo market is coming out of the deep freeze, with rich buyers drawn in by discounted prices and an improved outlook on San Francisco’s future.
As with all things in SF these days, AI has something to do with the turn of fortune for downtown condo developers.
“Buyers are betting on the AI boom. They either work in the space or know someone who does,” said Carmen Legarda, a Compass agent who represents 181 Fremont, a luxury tower where three units have gone into contract in the last three weeks.
Among those units was a penthouse taking up half the 68th floor that first listed for $15.5 million back in 2019. Like many downtown condos, the two-bedroom, 2.5-bath unit couldn’t find a buyer after the city cleared out during the pandemic. The price was dropped to $13 million last year and $10 million in late February. This month, it went into contract.
“Strategic price adjustments have made a real impact,” Legarda said.
Prices for condos downtown — which are typically in newer buildings with upgraded finishes and amenities like rooftop decks, social lounges, fitness centers, spas, and 24/7 concierges — used to reliably outpace those for condos in the rest of San Francisco, which are typically older and lack services. But that changed in 2020, when downtown condo pricing started lagging behind the rest of the city.
Luxury condo sales downtown started ticking up again at the end of last year, with buyers buoyed by high hopes for a turnaround courtesy of the Lurie administration, agents said. But that short rally came to an abrupt halt in early spring, due to uncertainties in the stock market and the broader economy caused by what Paul Zeger, founding partner at Polaris Pacific, referred to as “the Trump slump.”
The unpredictable conditions brought on by the president’s tariffs and other economic policies “caused people to say, ‘With all this craziness going on, I’m going to sit on the sidelines,’” Zeger said. “Now that it feels like it’s leveled off a lot, where we’ve gotten used to the volatility of it all, people say, ‘OK, the world hasn’t ended. I guess I can go forward and make my purchase.’”
The trend is especially notable because summer is when the luxury market usually goes on hold, while buyers are traveling. But this summer, buyers seem ready to make deals, Zeger said.
Agents on Polaris’ sales teams, which represent new condo projects across the West Coast, including One Steuart Lane on the Embarcadero, have stayed in touch with potential buyers for years, waiting for this exact moment, when lower prices are meeting a renewed interest in downtown, he said.
“It is a nice sign that San Francisco is back, because when people are spending this kind of money, they have options to go wherever they want,” Zeger said. “They appreciate that San Francisco is not only the best place to live, but now is quite a good value.”
Developers are being strategic about how they release their best units. At One Steuart Lane, Zeger said, condos in the building’s 01 line have been popular for their “dead-on” views of the Bay Bridge and the water. Unit 1001, a three-bedroom, three-bath with nearly 3,000 square feet, sold in November for $9.25 million. With that data in hand, Polaris in January began marketing the identical unit one floor below at the same price. It went into contract in July.
The buyer pool has changed since before the pandemic, Legarda said, with more looking to make San Francisco their primary home. Before 2020, many of 181 Fremont’s buyers were looking for secondary homes in the city to complement their main properties in the South Bay or wine country. Today, most of the building’s buyers are local, upgrading within the neighborhood and purchasing primary residences.
Luxury home “collectors” who also own properties in London, New York, and Hong Kong still make up one of the main buying pools at One Steuart Lane, Zeger said. The other groups are those who “already made their money in tech, and now they’re just enjoying it” and a more mature C-suite crowd looking to “rightsize” from bigger single-family homes to single-floor living.
This “savvy” crowd feels that, with no new luxury condo developments on the horizon, they need to move now or miss their moment to get a high-end unit at a bargain, Zeger said.
“People are feeling like, ‘Prices are good. I’ve got the money. The world seems to be stabilizing. Good time to do something. The price is no object. Give me the best thing you’ve got,’” he said.