Dear Neighbors,

Total condominium sales in South Beach declined 36% year over year (YOY) in the second quarter of 2023 with the average sale happening at $1,109 / square foot (down 7.8% YOY) over 69 days on the market (up 57% YOY). The median price was $1,215,000 versus the average price of $1,461,829. 60% of sales in South Beach were below $1,500,000. A combination of macroeconomic and sociological factors led Yerba Buena to similarly disappointing results.

7% mortgage interest rates are certainly slowing demand, however those are secondary factors to the staggering 31.8% of all office space that sits vacant in San Francisco. Notable Union Square landlords are defaulting properties back to lenders (Two of the largest hotels in the city and mall operator Westfield). The pain in the commercial sector will continue when commercial notes adjust, unless vacancies can reverse themselves. That may take some time. On the ground, showing requests for condos and Open House traffic has been slower than previous years.

Looking forward, I have heard that companies are going to start requiring employees to work 3 days a week from the office.

Residential rents are holding up quite well. Millennium Tower may have righted the ship. Perhaps we have bottomed out? This is a very complicated market, please contact me with any of your real estate needs for a detailed case by case analysis.

Best Regards, Paul Hwang, Ranked #1 in South Beach | 415.216.8746

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