Sol Properties has turned over the keys of its newly built condominium complex in San Francisco’s Mission Bay to its lender.
The San Carlos-based developer surrendered the 24-unit complex at 603 Tennessee Street to Avidbank, based in San Jose, the San Francisco Standard reported.
Avidbank assumed control of the six-story building after moving to collect an unpaid debt of $15.4 million. Arcon Construction Group, the building’s general contractor, had filed a lien on the property for $1.07 million in unpaid construction fees.
The 24,000-square-foot project, designed by San Francisco architect Stanley Saitowitz, is a victim of the city’s glacial approval process combined with a troubled condominium market.
The individual condos were first meant for sale to residents, but Sol Properties ditched the strategy and tried to sell the entire complex to an investor. It has nine one-bedroom condos, 14 two-bedroom condos and one three-bedroom condominium.
Sol Properties this year listed the building for nearly $19 million, then dropped it to $18 million, then $16.5 million, then its recently listed price of $16.2 million, according to the Standard.
Alexander Kolovyansky of Vanguard Properties, who worked as a listing agent for the property, said it was hurt by a delayed permitting process that left the property vulnerable to challenges in the condo market and rising interest rates.
The developer expected the final signoff for occupancy in 2021, but didn’t actually receive the certificate until this year because of permit delays by the city and PG&E.
By that time, Kolovyansky said, the condo market had shifted dramatically due to the pandemic, and they had run out of financing options from the lender.
“It’s a very unfortunate state of affairs, and they’re far from the only developer that’s having problems due to San Francisco policies mixed with federal policies impacting the market,” Kolovyansky said.
Median condo prices in San Francisco peaked in 2021 and have fallen each year since, according to Compass.
— Dana Bartholomew