Condo projects selling first, building later

From today's SF Business Times,

Encouraged by new legislation allowing binding sales contracts as soon as construction starts, San Francisco highrise developers are pumping millions into deluxe sales centers aimed at taking buyers' money months or years in advance.

In a Harrison Street warehouse next to the One Rincon Hill site where construction recently started on the first of two slender skyscrapers, developer Michael Kriozere is building out a $2.5 million sales office featuring a fully appointed, two-bedroom model apartments with lightboxes simulating views both night and day. The 9,000-square-foot sales office, with an oval-shaped rotunda, will open in June -- some 20 months before the first of two of Urban West's slender Rincon Hill towers is scheduled for completion.

Kriozere said the investment in the sales center is a response to the passage of Assemblyman Mark Leno's AB728. While state laws used to prohibit binding contracts with homebuyers until construction was complete, AB728 says that as soon as construction begins developers can collect non-refundable deposits big enough to cover any damages if the buyer defaults. Buyers are generally required to put down 3 percent of the sales price.

"This is the first time you can take a non-refundable deposit, so it means something. It's a serious contract," said Kriozere.

Other sales offices slated to open this spring include one for the 110-unit Park Terrace project in Mission Bay, the 246-unit SoMa Grand at Seventh and Mission streets and one catering to Intracorp's two projects, the 268-unit "green" Arterra building in Mission Bay and the 128-unit Hayes in Hayes Valley.

Signature Properties has already opened a sales center for the 99-unit 255 Berry St. and 70-unit Broderick Place, both of which are half sold out. All of these projects are at least a year away from opening. [more...]