February 6, 2011

Luxury Downtown SJ Condos Transforming Into Apartments

In case you were wondering if downtown San Jose needed more luxury condominium towers, looks like the answer is a big, fat no.  Thanks to Burbed reader sonarrat for alerting us to this story.

Struggling downtown San Jose condo tower to switch to rentals

By Joe Rodriguez, SJ Mercury News –  Posted: 02/02/2011 04:45:28 PM PST, Updated: 02/03/2011 08:34:16 AM PST

imageThe Three Sixty Residences, a luxury condominium tower offering panoramic views of Silicon Valley, has done a 180-degree fizzle. The downtown San Jose project will become a rental apartment building.

Condos or rentals, who cares?

That’s how downtowners feel after waiting years for four large condominium projects to dump thousands of new residents onto sidewalks and into coffee houses, restaurants and retail shops. So far, sales at the projects are creeping along after the housing market tanked.

Thank heaven that nonsense is over.  The idea of building apartment towers and selling off the interior units one by one was a great way for developers to make money.  As long as real estate kept going up, it was even a great way for condo owners to make money.  However, the game of musical chairs came to a halt and a number of condo owners find themselves under water.  Units filled with renters, or even worse, units filled with nobody, means the condo lifestyle isn’t at all what they imagined.  Homeowner fees climb even faster when not everyone is paying them.

imageSo take a look at this diagram from the article.  How did The Three Sixty manage to not sell a single condo if they used to have 90 of them under contract?  Did they just cancel them all?  Did the would-be owners get their deposits back?

And do you see what’s wrong with this picture?  Actually what’s wrong is the statistics.  We don’t care how many floors versus sold units there are in each building.  What’s important is how many units didn’t sell, because that would tell us how well these other three projects are doing.  Or, more likely, how not well.

Edward Tufte, where are you and why aren’t you publicly calling out the graphic designer for this image?

Since the Merc didn’t bother to tell you what you need to know, we will.  Here is how well each of the four major downtown high-rise condominium projects have sold.

Project Year Built Total Units Units Sold % Sold
City Heights 2007 124 99 80%
Axis 2008 329 138 42%
The 88 2008 197 117 59%
Three Sixty 2010 213 0 0%

image

And an even more important thing you need to know: Three Sixty Residences has been featured in Burbed, back when there were units for sale. So much for “finally got a piece of the pie.” Only owners get pie.  Renters just get to sniff it coming out of the oven.

The solution?  Make the pie higher!

Comments (40) -- Posted by: madhaus @ 5:15 am

40 Responses to “Luxury Downtown SJ Condos Transforming Into Apartments”

  1. SEA Says:

    With Silicon Valley being so special, I’m sure this is the first time this has happened in the entire nation. It’s difficult for me to imagine that anyone in San Jose would follow suit behind Las Vegas, Miami, and so on. It cannot happen that way.

  2. The Gilroy Alex Says:

    Renting these units is an excellent idea. Get those drug dealers off of 1st/2nd where they harass VTA users and get ’em up into those towers!

  3. madhaus Says:

    Reminds me of a great real-estate term usually heard on the commercial side: see-through buildings.

  4. Tuno Says:

    oh, this listing:

    http://www.apr.com/Default.aspx?pp=-1&pg=0&idx=1&l=3205601

    is SO FUNNY!! we always complain that the realtards that write listings are illiterate. so, here we have literate realtards (Alain Pinel) writing the description of an utter an complete crapshack. spacious foyer indeed!!!:):):)

  5. Tuno Says:

    okay, here’s what they say they’re selling: “Open and bright home with well used space. Formal entry/foyer, living room is spacious, eat-in family kitchen, nicely fenced with a gated long driveway leading to detached garage.” now go look.

  6. nomadic Says:

    How did The Three Sixty manage to not sell a single condo if they used to have 90 of them under contract?

    It’s my understanding that new condo towers need a certain percentage of units under contract before mortgages can be obtained. Kind of a chicken & the egg thing. If they really had 90 under contract, then they’d have 42% “sold” like Axis though, so maybe I’m mistaken (or they were exaggerating).

  7. nomadic Says:

    Wow, Tuno you found a real dump. East Palo Alto living at an East San Jose price.

  8. sonarrat Says:

    #4: Look at all those big mature trees in the yard! The owner has watched the trees grow tall! (And done nothing to maintain them!)

  9. madhaus Says:

    Hey, that’s East Redwood City! Practically West Atherton!

  10. Real Estater Says:

    If Silicon Valley were planned properly, everyone should be living in high-rises, and then there wouldn’t be such problems with high real estate prices caused by land-grabs.

  11. DreamT Says:

    Nonsense. When would the high-rises have been built? In 1950, between a prune field and an apricot field? Or in 1980, with forced relocation of 98% of existing homeowners then razing of the post-war tract houses?

  12. SEA Says:

    They are not making any more land, but they should have built a high-rise Palm as part of Palo Alto.

  13. nomadic Says:

    DreamT, have you been to Ontario? It’s really odd, but you’ll see high rises in fairly small towns like Guelph surrounded by -nothing-. Well, in this case, a “high rise” is only about 8-10 floors, but it’s still quite out of place.

    I would expect they enacted the zoning before other housing went in of course. You’re not going to kick people out of their houses here like they do in China.

  14. Real Estater Says:

    What we need is a zoning law that require at least 10 stories. That’s the best way to “make more land” where there is no more land.

  15. DreamT Says:

    Look, how cute, Real Estater put a dislike on all of the comments! He reminds me of the Darth Vader in the VW ad.

  16. madhaus Says:

    Yup, every time there’s a post from #14 or his alter egos, suddenly every single regular gets negged. Then I have to Like every single post to offset the mass-disapproval.

    #14, if you dislike everyone’s comments so much, why do you come here? Seriously?

  17. San Jose Craig Says:

    RE makes a good point. To add to that, there needs to be more comprehensive city planning. Folks want shopping, dining and entertainment around the area to have a true urban life style.

  18. PerfectAngel Says:

    Yup, every time there’s a post from #14 or his alter egos, suddenly every single regular gets negged.
    —–

    Sunday ritual.

  19. nomadic Says:

    #17, if you want urban, move to SF. Or “Manhatten.” If people want to live in an urban center, there are plenty of choices in the area.

  20. PerfectAngel Says:

    Folks want shopping, dining and entertainment around the area to have a true urban life style.
    —–

    We already have “life style”, with two parts “life” and “style”.

  21. SEA Says:

    After acquiring a couple rentals, our Sunday regular doesn’t have the time to post the other six days of the week. Yes, that’s right, he has more important things to do–you know, like trying to figure out how to spend all that easy money coming in, or possibly he’s running from store to store trying to find the cheapest light bulbs.

  22. DreamT Says:

    “trying to find the cheapest light bulbs.”
    I recommend the $1.99 4-set at Fry’s.

  23. anon Says:

    #21, it’s not just broke people who have to worry about ‘making rent.’

    Small time landlords like willow glenner and real estater also do as well. Even if they have sufficient amount of capital to cover the expenses of their ‘income properties’ indefinitely, they won’t want to (and won’t do it) because it would be wasteful to pay for a house with nobody living in it. As a result, they are forced to find tenants and deal with all the blue collar frustrations associated therewith.

    The moral of the story? Well, if you are tired of living a stable affluent lifestyle, you can add some excitement by exposing yourself to to some of the sources of instability the poor enjoy – namely worrying how you are going to ‘make rent’ (ie: pay your mortgage). I can see why this would be appealing amongst the less educated.

  24. anon Says:

    Oh, and doesn’t everyone who only has weekends free want to spend their weekend dealing with rental properties? Time on the weekend is “free,” you know, and therefore worthless.

  25. Juno Says:

    Anybody know what’s the association fee at these places?

  26. madhaus Says:

    #25, yes, somebody does.

  27. Juno Says:

    What do you mean?

  28. madhaus Says:

    #25, you asked if anyone knows the fees. And I replied yes, somebody does know them. But you didn’t ask what they were. 😀

    Did you try clicking on the photo of the four skyscrapers?

  29. SanJoseRenter Says:

    #25: HoA $349-$719. Ouch.

  30. Juno Says:

    Ouch is right. Now I wonder how much these will rent for.

  31. SEA Says:

    In regards to the level of rent–we all know that no matter how small the rent, renting is more expensive than owning, so I’m sure the owners finally woke up and realized an easy way to make some cash.

  32. nomadic Says:

    #31, of course renting is more expensive. That’s why the developer decided to switch from condos to apartments – more money for them as renters keep forking over their rent every month.

  33. SEA Says:

    You know what I’m thinking…

    $500,000 isn’t a lot of money if you are a buyer, but it would buy an infinite number of years renting at $2,000 per month, with a discount rate of 5%.

  34. ChrisD Says:

    Without buyers, how will renters rent?

  35. Real Estater Says:

    Makes sense, Chris.

  36. Real Estater Says:

    >>$500,000 isn’t a lot of money if you are a buyer, but it would buy an infinite number of years renting at $2,000 per month

    Math is very hard for you, SEA…

  37. madhaus Says:

    Aw, how cute. Darthy is back, and he brought his little friends!

    These are not the thumbs you’re clicking for.

  38. anon Says:

    “Without buyers, how will renters rent?”. Current buyers. Aka bagholders. Houses don’t disappear because there are no buyers, they just get cheaper.

  39. Is the Bay Area in another Housing Bubble? Will the Next Pope be Catholic? [Burbed.com] Says:

    […] it just a couple of years ago we were reading about condo complexes that had reverted to all-rental buildings (also known as apartments)?  Why yes, it was.  But obviously Milpitas is Much More […]

  40. Official Burbed Ballot Guide [Burbed.com] Says:

    […] Measure B: San Jose pensions. Burbed does not have an official position on this, but has enjoyed the complete disconnect between how the SJ Mercury News has been covering this (Chuck Reed walks on water and raises the dead) versus NBC11 (Chuck Reed is a lying scumbag who eats babies for breakfast).  The truth is probably that there is nothing in the pension fund at all because it was all invested in that downtown condo tower that didn’t work out so well. […]


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