By Bianca Torres, Reporter, San Francisco Business Times
Developer Patrick Kennedy just sold his first San Francisco micro-unit project at 38 Harriet St. for $7.5 million or $326,088 per unit to FRE 398 LLC, a local investor.
The 23-unit building drew numerous offers including bids from overseas buyers after hitting the market in June. The winning offer came in $100,000 above the asking price.
The buyer is a husband and wife team who own 300 apartments in the Bay Area.
The deal comes with a five-year master lease with the California College of the Arts, which will use the units as dorm rooms.
“This buyer pool was really unique. We didn’t see the familiar buyers from traditional, rent-controlled buildings that we typically sell,” said Michael Thomas, a broker with CBRE, who represented Kennedy along with Toby Costello. “The sale attracted a lot of off-shore interest and people looking for ease of management.”
The project drew plenty of attention when it was completed last year because of the size of the units and site. The units are 295-square-foot studios that were built by Zeta Communities and assembled by Pankow Builders onto a 3,750-square-foot lot.
Some people debate whether encouraging micro units are good for the market, but Patrick Kennedy, head of Berkeley-based Panoramic Interests, has said they allow developers to build on small, in-fill lots and can help satisfy demand for housing in pedestrian-friendly neighborhoods.
Kennedy is already working on his second micro-unit project at 1321 Mission St. in San Francisco that will include 160 units in 11 stories. Unit sizes include 275-square-foot studios and 625-square-foot two-bedroom units.