How Sunset District Became the Hottest Market in SF

This week, one of the top stories put the spotlight on an undersung neighborhood in San Francisco to find out what is driving competition for homes there higher than anywhere else in the city.

Agents in the Sunset District told The Real Deal that there were a few factors spurring sales in the Southwestern San Francisco neighborhood, particularly its entry-level homes near outdoor amenities and a burgeoning cool factor that is perking up the once-sleepy neighborhood. An increase in sunny days in the notoriously foggy microclimate, perhaps brought on by climate change, has helped as well, especially in the Outer Sunset and along Ocean Beach.

“There’s no neighborhood or category of real estate in the city that I think has more interest and activity than the homes out here,” said Coldwell Banker agent Jeremy Rushton, who specializes in Outer Sunset listings. “It’s definitely the nicest part of the city where you can get a house for well under $2 million, which is like the new $1 million. It’s just a high quality of life for what you’re paying.”

That combination of price and amenities has pushed bidding wars and whiplash quick sales in the neighborhood.

“This is the last frontier of affordability,” said Janice Lee, a top agent in Coldwell Banker’s Sunset office.

Zillow to ban some private listings

In broader resi news, Zillow confirmed this week that it plans to ban the listings of agents who market private listings publicly without sharing them with Zillow. It has already sent warnings to those in violation, according to the San Francisco Chronicle, and the ban will begin at the end of June.

The move is seemingly aimed at a new program at Compass, the largest brokerage in the country, that allows home sellers to move these so-called pocket listings to the public market after Compass has had the chance to market the property exclusively through its system.

Buyers who go directly through Compass can learn about a listing before others see it on Zillow, enabling them to make an offer before the property hits the open market. It also allows sellers to soft-launch their home and field early offers.

At the start of 2025, there were 384 homes in the Bay Area that were in violation of Zillow’s rules by listing exclusively via Compass, according to the San Francisco Business Times.

A spokesperson for Compass clarified to The Real Deal via email: “[National Association of Realtors] and Zillow permit ‘office exclusive’ listings. Zillow takes it one step further than NAR and says that an agent who shared office exclusive listings 1:1 with agents outside of their brokerage firm will have the listing banned.”

Compass won’t be the only brokerage affected by the changes. Other firms, such as Coldwell Banker and eXp Realty, also have their own exclusive listing networks.

In the San Francisco Association of Realtors Multiple Listing Service, “there are 105 non-Compass ‘MLS Coming Soons’ and 50 Compass ‘Coming Soons,’” the Compass representative told TRD, “showing that 68 percent of the listings that Zillow will ban are not from Compass.”

Jay Paul Co. lands Silicon Valley’s largest office lease since 2023

A Jay Paul Company project in Sunnyvale has landed a big fish from Bentonville. The e-commerce unit of Walmart has signed on nearly 340,000 square feet in the largest Silicon Valley office deal since 2023, according to the East Bay Times.

The developer spent $30 million to renovate the two office buildings Walmart will take in its Tech Corners complex, with upgrades completed this year.

The campus, which has nearly 960,000 square feet across five office buildings and an amenities hub, has historically maintained full occupancy, according to Newmark’s Phil Mahoney, who represented Jay Paul Company in the deal.

Walmart could house up to 1,700 tech workers in the two buildings, though the number of workers officially planned for the new offices isn’t yet known.

The lease marks an expansion in the South Bay city for the retail goliath. It already has 719,000 square feet over four buildings subleased in the Moffett Green tech campus about a mile from Tech Corners. Walmart signed the sublease in 2023 and opened the doors to a campus that could hold up to 3,600 employees in April.

Secret apartments lead to jail time for two Caltrain workers

Two Caltrain workers who allegedly embezzled funds to secretly build apartments inside of historic stations will serve a combined six months in jail, according to SFGate.

Seth Worden and Joseph Navarro were charged in March 2024 after authorities discovered they had built apartments inside portions of the Millbrae and Burlingame stations, embezzling about $50,000 from the rail service provider to do so. Navarro directed Worden to build out the homes and submit invoices under the $3,000 limit, which he could approve as a Caltrain station manager, according to prosecutors. Navarro lived in the Burlingame station as a personal residence from 2019 until it was discovered in 2022. The Millbrae home was also built in 2019, but found by Caltrain workers just one year later.

The apartments are still intact and the work was “well done,” Steve Wagstaffe, San Mateo County district attorney, told SFGATE. Caltrain does not yet have any immediate plans for the residences, agency spokesperson Dan Lieberman told SFGATE, which are not up to code and located in historic buildings.

Worden was sentenced to 60 days in county jail and one year probation, according to Wagstaffe. He also has to pay about $8,000 back to Caltrain’s governing body, and get counseling for substance abuse. He pleaded no contest in a deal where he agreed to testify against Navarro, who got four months in county jail with 28 days credit for time served and two years probation, according to Wagstaffe. The amount he owes the transit board will be determined in August.

Former 23andMe HQ sells for massive discount

In further Sunnyvale commercial news, the former headquarters of bankrupt genomics giant 23andMe has been sold back to its developer for nearly $88 million, according to the Silicon Valley Business Journal.

The price is less than half of the $183 million developer Stockbridge Capital Group sold it for to Spear Street Capital in 2019. At the time, 23andMe took up the entire three-story, 155,000-square-foot building located less than a mile from the Sunnyvale Caltrain station.

But the company shut down its offices during the pandemic, and when it went hybrid in 2022 it moved to about half the square footage in South San Francisco, though its lease in Sunnyvale runs until 2030.

Though the genetic testing company went public in 2021 and was once valued at $6 billion it has struggled with weak demand and in 2023 suffered a massive data breach that impacted nearly 7 million customer accounts. It filed for Chapter 11 bankruptcy in March and is still in business but looking for a buyer.

Machine Investment Group picks up two SJ resi towers for $182M

An affiliate of New York-based Machine Investment Group has paid $182 million for two residential towers in downtown San Jose through a fast-track foreclosure proceeding, according to The Mercury News.

The two, 22-story high-rises at 188 West Saint James Street have a total of 643 condominiums, some of which are owned and some of which are being used as rentals.

An affiliate of China-based Z&L Properties owned and developed the towers starting in 2015 and wrapped up construction in 2021. Z&L defaulted on a $330 million 2019 loan from an affiliate of Mack Real Estate Credit Strategies to finance the property. After the default, lenders pursued an expedited deed-in-lieu of foreclosure process.

In addition to the loan delinquency, the towers faced other struggles and scandals including lawsuits, alleged construction errors, allegations of slave labor, evidence that some workers were forced to live in a warehouse in the East Bay, and intrusions by homeless people into the property’s hallways.

Machine Investment Group managing partner Eric Rosenthal told The Mercury News that his firm is “uniquely positioned to apply its construction, finance and development expertise to stabilize building operations, relaunch sales, and provide an important housing solution to one of the most dynamic residential markets in the country.”