When a condominium in San Francisco’s Millennium Tower hit the market a decade ago, it offered a living space — and a lifestyle — that only a well-heeled buyer could hope to attain.
Millennium symbolized luxury and boom time aspirations. A concrete hulk swathed in glass at Mission and Fremont streets, it gleamed over a South of Market neighborhood that had become the spiritual home of tech. Residents of Millennium could walk to work, eat lunch at the nearby Ferry Building, and return home to an Olympic-sized pool and 24-hour concierge services.
With all of those perks, a one-bedroom on the 15th floor fetched more than a million dollars in 2014.
But the same unit sold last week for $615,000 — or $779 a square foot — a 45% decline in value in the course of 10 years.
It wasn’t the only Millennium condo whose price appeared to be in free-fall. An eighth-floor unit listed for just over $1 million in 2023 sold this past June — for $800,000. At $662 a square foot, it represented a nadir.
By now, Millennium has become infamous for engineering failures that caused it to tilt and sink, requiring a $100 million structural fix. Yet that saga — and the many bad headlines it generated — doesn’t fully explain the tower’s plummeting home prices. Real estate agents and experts instead view the building as a bellwether of larger economic trends.
First and foremost: the work-from-home quandary. The pandemic may be fading, but people have fully acclimated to working remotely. As a result, realtors can no longer lure prospective buyers to SoMa by promising a home close to one’s job. And then there are the slumping downtown corridors, where blocks that once housed tech companies and retail giants are pocked with vacant storefronts.
“Half the benefit of living (at Millennium) was the proximity to offices,” said Daniel Hershkowitz, chair of the managers council at the San Francisco Association of Realtors.
He noted how the pandemic and the rise of remote work deflated that big selling point.
“It’s sort of like being next to a train station,” Hershkowitz said. “And then one day, the station goes away.”
The downtown condo market cratered in 2022, as shown in a report from the real estate brokerage Compass. Median sales prices plunged 16.5% from the prior year — from $1.475 million to $1.23 million in such neighborhoods as South Beach, Yerba Buena, Civic Center, Mission Bay and SoMa — amid a sluggish recovery from COVID-19 shutdowns.
Since then, the economy has started to pick up, a shift made visible in cleaner streets and social events, said Steven Huang, president-elect of the San Francisco Association of Realtors. Huang has spoken with CEOs who are tightening their return-to-office policies, which in turn has increased car commutes and Muni ridership as well as the number of people walking to work — a population that could be drawn to residential skyscrapers.
“Anecdotally, I think condo prices may already have hit a bottom and are starting to come back up,” Huang said. He struck a tone of cautious optimism, acknowledging that many intricate factors influence the housing market.
Mortgage interest rates are high but falling rapidly, Huang said, pointing to a cut that the Federal Reserve announced Wednesday in an effort to fight inflation. Some prospective buyers are waiting for rates to plunge further, Huang said, which could explain the current low demand in the condo market. Yet as interest rates drop, more buyers will swarm in, causing prices to increase.
Still, Millennium may be an outlier, Huang and others said. Billed as the pinnacle of five-star living when it opened in 2009, the shimmering, 60-story shaft fell from grace in 2016, after engineers monitoring its settlement discovered it had sunk 18 inches into the ground and was leaning 14 inches to the west.
After a complex series of repairs and a flurry of lawsuits that settled for undisclosed amounts in 2019, homeowners and real estate agents expressed hope that the worst is over. The settlement funded a $100 million fix, and condo owners raised their monthly fees last year to pay for cost overruns. According to spokespeople for the homeowners’ association, a small portion — 1% — of dues go toward underground sensors that monitor the building for structural problems.
The tower, however, has struggled to shed its battle-scarred image. Homeowners often play defense, insisting the building’s troubled history has not driven down home prices or scared off potential buyers. Homeowners’ association spokesperson Evette Davis focused on the future in a statement to the Chronicle.
“No one has a crystal ball on where the market is going,” Davis said, “but seasoned real estate professionals will tell you these lower prices are an opportunity to buy into a marquee building with unique, one-of-a-kind services in the East Cut, one of the most successful neighborhoods in San Francisco.”
James Testa, the real estate agent and longtime Millennium resident who last week sold the $615,000 15th-floor condo said he remains “very bullish” about the building.
“I think it’s the best location in the city,” Testa said. “You are one block away from Market Street. You sit, literally, right next door to the Salesforce Park. You are three blocks from the Embarcadero. You never need to get in your car if you don’t want to.”
Although Testa has lived in the building for fifteen years, he’s still dazzled by its bulk, its top-flight amenities, and the staff who greet him as “Mr. Testa” every time he walks through the lobby doors.
He described the new owner of the fifteenth floor unit as “very discerning,” having managed to clinch a spacious condo with blond-wood cabinetry and east-facing windows for “just a hair below” the asking price of $649,000.Waitrose Recipes