1624 Larkin Street Sold: How We Closed a Vacant 10-Unit Nob Hill Building Through COVID

By Kevin Caravelli | Caravelli Group | Coldwell Banker Commercial. Sale closed October 1, 2021.

Caravelli Group sold 1624 Larkin Street, a vacant 10-unit apartment building in San Francisco's Nob Hill for $7,500,000, or $750,000 per unit. The seller, an overseas non-profit selling U.S. property for the first time, received full appraised value with zero buyer contingencies. The sale closed off-market on October 1, 2021, more than a year after the first buyer walked away when COVID-19 shut down San Francisco.

1624 Larkin Street at a glance

It was the highest price per unit of any Nob Hill apartment building sold in 2021, and one of the 10 highest in San Francisco that year, based on Caravelli Group's records of 5+ unit sales.

The challenge: a vacant building and a first-time seller

Built in 1984 and once used as student housing, 1624 Larkin had sat completely vacant for more than a decade. It had no tenants, no recent improvements and no ongoing maintenance.

The owner was a non-profit based in mainland China that had never sold real estate in the United States. Its board set firm terms:

• A price at or above the appraised value, with no room to go lower

• No purchase contingencies

• A process its leadership overseas could follow and approve

With no rent roll, buyers could not value the building on income the usual way. They had to underwrite it on its future rents, its condition and what it would cost to bring back to life.

What went wrong: COVID-19

We launched the marketing campaign in early 2020 and received multiple offers. The strongest came from a motivated buyer whose letter of intent included a 15-day investigation period.

Then COVID-19 reached San Francisco. The city entered lockdown, and that buyer backed out.

How we closed the sale

The seller's terms did not change, so we kept working the buyer pool through the pandemic. Our approach:

• Held the appraisal-based price rather than chasing the market down, because the seller could not accept less.

• Pre-qualified buyers for both funds and the ability to close without contingencies, so the seller would not lose another deal.

• Kept the sale off-market, working directly with buyers who could handle a vacant building that needed work.

• Managed communication across time zones with the seller's leadership, translating each step of a U.S. sale into a clear decision for them.

More than a year later, we found a qualified buyer who paid full appraised value with zero contingencies. The sale closed on October 1, 2021.

What this sale shows about choosing a broker

Most San Francisco Apartment buildings sell in a normal market with a rent roll, an MLS listing and a buyer who can get a loan. The ones that test a broker are vacant buildings, sellers with fixed terms, overseas or institutional owners, and markets that turn mid-deal. 1624 Larkin had all four.

If you own a San Francisco apartment building with any of those complications, choose a broker who:

• Sells 5+ unit buildings in San Francisco as their main business, not as a side line to houses or condos

• Can show recent sales in your district at your building's size

• Knows the buyers who can close quickly without contingencies, and can sell off-market when that protects you

• Has finished hard deals, not only easy ones

Caravelli Group has sold San Francisco apartment and mixed-use buildings since 1985, focusing on 5- to 75-unit buildings. We publish a quarterly report on every 5+ unit sale in the city, so our pricing starts from actual sales in your district.

FAQ

What did 1624 Larkin Street sell for? $7,500,000 on October 1, 2021. That is $750,000 per unit and $536 per square foot for the 10-unit, 14,000 sq ft building.

Who sold 1624 Larkin Street? Caravelli Group of Coldwell Banker Commercial Realty represented the seller.

Can you sell a vacant apartment building in San Francisco? Yes. Vacant buildings sell, but buyers price them on projected rents and the cost of renovation rather than on current income. The right buyer pool matters more than with an occupied building.

Can an overseas owner or non-profit sell a San Francisco apartment building? Yes. 1624 Larkin's owner was a non-profit based in mainland China selling its first U.S. property. Expect extra steps for board approval and communication across time zones.

What is an off-market sale? A sale marketed directly to qualified buyers without an MLS listing. It can protect privacy and suit sellers with strict terms, as at 1624 Larkin.

What is my San Francisco apartment building worth? Caravelli Group provides confidential opinions of value based on current sales in your district. Contact Kevin Caravelli at 415.271.8517 or Steve Caravelli at 415.706.0008.

About the authors

Kevin Caravelli is a partner at Caravelli Group and an investment sales agent in the San Francisco office of Coldwell Banker Commercial Realty, specializing in multifamily and mixed-use buildings. DRE #01988049 · 415.271.8517 · kevin@caravelligroup.com

Steve Caravelli founded Caravelli Group and has nearly four decades of experience and more than $1.7 billion in closed transactions. DRE #00879834 · 415.706.0008

Thinking about selling a San Francisco apartment building? Read our latest quarterly market report or call for a confidential opinion of value.