San Francisco Business Times: “Luxury Condo Developers Lure Buyers with Customized Build-Outs”

October 26, 2017

Luxury Condo Developers Lure Buyers with Customized Build-Outs

October 26, 2017 By Mary Ann Azevedo

Developers are taking high-end residences in San Francisco to a new level by offering buyers the ability to customize their properties during build out.

Trumark Urban’s The Pacific and Tishman Speyers’ Lumina are examples of luxury condominium projects containing customizable shells, giving buyers the opportunity to create a floor plan and design the properties based on their individual desires.

In September, Tishman Speyers brought to market two double-height penthouses ranging from 5,200 to 5,700 square feet in its Lumina complex. The 656-unit high rise is located on the south side of Folsom Street between Main and Beale Streets, two blocks from the Embarcadero waterfront.

Those two homes are the only custom-shell units in the tower and start at $13.5 million. Both penthouses have glass facades and are located on the 41st and 42nd floor of Lumina’s Tower B. Designer-ready floor plans from Miami architectural firm Arquitectonica are available and can be paired with a variety of custom interior layouts.

Carl Shannon, senior managing director at Tishman Speyer, said that the customization of very high-end luxury condominiums “is becoming more common than ever in the marketplace due to the fact that today’s buyers want to personalize their homes to meet their tastes.”

“Finishes, colors and materials are all very personal decisions, and when one purchases a luxury home, they often have a vision they’d like to fulfill for their living space,” Shannon continued.

As of mid-September, more than 85 percent of Lumina’s units were sold and in contract, the developer said.

Visualization technology

Trumark Urban’s The Pacific has a total of 11 penthouses, eight of which are customizable. Four of those are what are being described as “grand” penthouses.

Located in San Francisco’s Pacific Heights neighborhood, the luxury project contains a total of 76 units including the 11 penthouses. The grand penthouses are located on the 8th and 9th floors, feature private terraces over 1,800 square feet and are two stories each. The units are a total of 3,000 to 4,000 square feet, not including the private terraces.

Four homes at the corners of The Pacific’s penthouse level on the 7th floor offer single-level living ranging from 2,100 to 3,100 square feet. They are also offered with a customizable shell so that owners can select design details and layouts.

Of the eight homes, five have been sold. They current inventory ranges in price from $6.5 million to $13.9 million. However, one of the grand penthouses set a new price record in San Francisco when it sold for $15.875 million earlier this year, according to Trumark Urban.

Buyers are able to manage design with their own teams. But if they are looking for a more turnkey solution, Trumark Urban recently unveiled a new “White Glove Buildout Service,” which is a full-service concierge design-to-build-out assistance. Trumark Urban estimates that build-out costs would range from $600 to $700 per square foot for the white glove service. The units are designed by Handel Architects and Handel Interiors.

To help buyers visualize the pre-conceptualized spaces, Trumark Urban offers virtual reality goggles, model 3D floor plans and virtual 3D tours of Handel’s proposed design layout.

Since launching sales in the summer of 2016, The Pacific is now more than 90 percent sold. Arden Hearing, managing director of Trumark Urban, noted that there is a unique buyer profile in the super luxury space.

“At times that leads to a desire for pretty intense customization,” he said. “So we provide the opportunity for our homebuyers to really customize everything – they’re able to select plumbing fixtures, all finishes, flooring and cabinetry for example. We can move stairs or include elevators.”

To build out the customizable shells, Trumark Urban hires third-party general contractors that are not the same “because of the intimacy required,” Hearing said.

Unique designs

Not all new luxury developments in San Francisco are following the customizable shell trend. Jay Paul Co. has entered the residential market with its new mixed-use project called 181 Fremont. The $630 million mixed-use tower is more than 700 feet high (802.5-feet including the spire.) It will contain 435,000 square feet of Class A office space – some of which has already been leased by Facebook — 55 residences and 12 accessory suites.

While 181 Fremont is not delivering condos as shells, each of the 55 homes were designed by Orlando Diaz-Azcuy in accordance with its location within the building and views with no two home layouts being identical.

The general contractor, Level 10 Construction, will work with each resident on customization requests on a limited basis, to the best extent possible, said Christian Conrad, senior project manager of 181 Fremont.

For his part, Trumark Urban’s Hearing believes the luxury market is headed more toward the customizable direction.

After doing market research five years ago for The Pacific, Trumark toured super luxury buildings in New York “and heard over and over “ that many home buyers were coming in and completely remodeling units and “doing their own thing.”

“One is only able to provide this intimacy at the ultra high-end of the spectrum,” Hearing said. “Very sophisticated home buyers know what they want so we help facilitate that.”

The Wall Street Journal: “How Developers Sell the Promise of a Luxury Lifestyle”

October 20, 2017

How Developers Sell the Promise of a Luxury Lifestyle

To sell out new condo developments faster and for more money, developers carefully curate model units in ways that go far beyond mere staging.

October 19, 2017 By Alina Dizik

In San Francisco, Rebecca Schumacher and Guido Piccinini bought this corner unit at the Pacific, a 76-unit building in the Pacific Heights neighborhood.

When potential buyers tour a model luxury apartment in West New York, N.J., they can plop on the couch or grab sparkling water from the fridge. They can’t, however, brush their teeth with the electric toothbrush or scrub the toilet with the marble-clad brush next to it—none of the plumbing fixtures work. But it’s homey touches like these that make a model unit feel “lived in”—and help make a sale.

“You want customers to daydream a little bit. Everyone always buys what they see,” says Alexander Hovnanian, developer of Nine on the Hudson, a 13-story luxury-condo project to be completed this year, with units ranging from about $675,000 to $6 million.

To close the deal in a competitive condo market, developers carefully curate model units in ways that go far beyond mere staging. Custom-designed closets, one-of-a-kind artwork, designer light fixtures and brand-name luxury goods are strategically chosen to sell the promise of a lavish lifestyle that comes with a luxury apartment. At times, the model units are created in showrooms far from building sites still abuzz with construction cranes and crews.

Ms. Schumacher and Mr. Piccinini weren’t sure they could downsize to a condo. But seeing model units helped them figure out how to use the space.
Ms. Schumacher and Mr. Piccinini weren’t sure they could downsize to a condo. But seeing model units helped them figure out how to use the space. PHOTO: ALANNA HALE FOR THE WALL STREET JOURNAL

Condos typically sell faster or for more money when potential buyers can see completed models and not just computer renderings viewed online, says developer Andy VanHorn, who adds he spent “hundreds of thousands” of dollars to outfit three units at the historic Wardman Tower in Washington, D.C. Before 32 units in the landmark building were completely restored in 2016, prospects could see a model unit with herringbone floors, Thermador kitchen appliances and spa-like master bath—features that help up the selling price, says Mr. VanHorn, executive vice president of JBG Smith. “As models are delivered, people pay more.” Prices at Wardman Tower range from $2.5 million to $9 million.

To target specific demographics, developers make sure to create various décor styles, often working with multiple interior designers. In smaller units, pared-down modern furnishings with brighter colors typically appeal to younger buyers, while larger units often use more traditional interiors to draw in buyers who are downsizing from a larger home, says Highlyann Krasnow, principal at the Design High, a New York interior-design firm specializing in new construction.

“We make some assumptions,” says Ms. Krasnow, who adds that the process can take six months and can cost $100,000 or more.

In some cases, the units may be sold as completely unfinished raw space, with the models just an example of what can be done. In other cases, the model unit gives buyers a look at the fixtures and finishes that will be available in all of the units in the building. Some buyers opt to purchased furnished models.

In smaller units, carving out a dining area from the main living space increases interest, even if condo owners skip the formal space, Ms. Krasnow has learned. She often uses light-colored marble in kitchen and bathroom areas, even though “it’s not the most durable.”

In each project, she works to highlight the room layout, the use of high-end flooring or extras, such as surround sound or motorized window shades. Furniture and wall colors are somewhat neutral to appeal to a wider swath of potential buyers. “Even if that’s a little boring for you, you are not offended by it,” she says.

In Washington, D.C., developer Andy VanHorn says he spent ‘hundreds of thousands’ of dollars to outfit three model units at the historic Wardman Tower. Here’s a living room in one of the models.
In Washington, D.C., developer Andy VanHorn says he spent ‘hundreds of thousands’ of dollars to outfit three model units at the historic Wardman Tower. Here’s a living room in one of the models. PHOTO:AKSEIZER DESIGN GROUP/JBG SMITH

Developers say models help smooth over a unit’s potential shortcomings, including odd or small layouts, street noise or lack of natural light, says Mr. VanHorn. This year, the Wardman developer turned an extra-wide prewar-style corridor into a “gallery” with multiple seating areas and custom art pieces to help buyers imagine how to furnish the $9.9 million penthouse unit. The model helped highlight the vintage layouts, where “not everything is exactly perfect,” he says.

Walking through a model unit may speed up a buying decision because it evokes feelings of happiness, says Stephen Conroy, an economics professor at the University of San Diego who studies real-estate amenities.

Rather than looking at the unit on paper, the experience of seeing and feeling the various finishes evokes “an emotion that’s going to enter into the buying decision,” he says. While model-unit purchases are not tracked by real-estate services, 31% of buyer’s agents say that staging a home increases its value by 1% to 5%, according to a 2017 survey of 1,894 agents by the National Association of Realtors.

For Alan Pellegrini, chief executive of an aerospace company, walking through a model at Westlight, a 71-unit luxury condo building in Washington, D.C., helped him realize that he would be cramped in the unit he had in mind. He paid “a couple hundred thousand” to swap the two-bedroom he already had under contract for a similar condo in the same building but with a den that he plans to turn into a library. “When you see the model, it shows the potential,” he says. Mr. Pellegrini, 54 years old, declined to disclose the price he paid for his unit, but two-bedroom apartments in at Westlight range from $1.26 million to $2.7 million.

This model unit at Manhattan View at MiMA in New York’s Hudson Yards has a computer desk next to the TV. The setup was copied by Claudine Prowse, who paid $2.3 million for her one-bedroom unit there.
This model unit at Manhattan View at MiMA in New York’s Hudson Yards has a computer desk next to the TV. The setup was copied by Claudine Prowse, who paid $2.3 million for her one-bedroom unit there. PHOTO: EMILY GILBERT

After 12 years in a single-family home, Rebecca Schumacher and Guido Piccinini weren’t sure they could downsize to condo living. But after viewing the model units at the Pacific, a 76-unit building, in San Francisco’s Pacific Heights neighborhood, the couple was convinced. The couple purchased a corner unit and moved in this year, creating a formal dining area out of one of their three bedrooms. The model units were designed with marble slab kitchen counters, modern moldings and custom headboards to fit the master bedrooms. “They all felt like home despite being smaller spaces,” says Ms. Schumacher, 66, a real-estate agent. Ms. Schumacher would not disclose sales price, but a similar unit is listed for $4.87 million, according to Redfin.

Choosing the right brands to display in the models is key, says Maile Aguila, senior vice president of residential sales at Swire Properties . This Hong Kong-based developer is behind Brickell City Centre, a mixed-use development in Miami. Potential buyers need to be familiar enough with the designs to feel as if they are walking into their home, says Ms. Aguila. When completed, many of the 390 residences at Brickell City Centre will have interiors created by the Brazillian furnishings brand Artefacto, which is familiar to the area’s South American buyers, she says. Many of the units are purchased furnished, she adds, and typically add roughly 12% to 15% to the sale price. Units at Brickell City Centre range from about $650,000 to $6 million.

Viewing the model in Manhattan View at MiMA, a 147-unit luxury building in New York’s Hudson Yards, made a difference for Claudine Prowse, a 44-year-old biotech executive. She was impressed by the “smart use of space” in a one-bedroom unit that she didn’t think allowed for a dining room. Instead, the one-bedroom model unit showed a computer desk on the same wall as her flat-screen television and created a built-in dining nook from an unused corner near the kitchen. Units at Manhattan View range from $1.595 million to $6.45 million. The model “was so functional and cozy,” says Ms. Prowse, who paid $2.3 million for the unit. After signing the contract, “I literally stole the exact ideas.”