- After A $100 Million Retrofit, San Francisco’s Millennium Tower Stops Sinking
- Sales Turnover Appears To Have Normalized
- Prices Still Haven’t Recovered, But Outlook Appears Better
Back in 2016, I remember learning about the Millennium Tower in San Francisco, which by then had sunk 16 inches and leaned 6 inches. Some opined that the values “post-sinking” fell close to zero. Back in 2017, I wrote that the stigma will probably remain for years even when the problem is fixed. I remember reading about the penthouse apartment listed for $14 million in 2023 and thinking that if they waited long enough, it would eventually become a “garden apartment.” The penthouse was previously sold for $13 million back in 2016 after being extensively renovated. I summarized this building odyssey last fall and how it looked like the $100 million fix seemed to work. The Wall Street Journal took a look at the sales performance [gift link] of the building and found that its values haven’t recovered.
The Penthouse “Garden Apartment” Scenario
As I mentioned earlier, a speculator purchased a penthouse apartment for $13 million after the previous owner spent nearly $20 million ($9.4 million + $10 million in renovations). The new owner held on to the property for a decade and was only able to resell his unit for $9 million.
When you see the decor of the penthouse unit, it seems highly personalized, and it’s been my experience that buyers at the high end don’t want highly customized interiors because they want to make it their own. At the recent $9 million purchase price, the price says more to me than it sold without any premium for any of the renovations. The market has risen since 2009, so the sales price seems to reflect the residual stigma of the leaning era of the building.
Early Sellers Prior To 2016 Awareness Of Sinking
Sellers who sold before the 2016 acknowledgment of the sinking and leaning generally made 50% on their purchases from the developer. I still ask the question as someone who has no expertise in earthquake-proof construction: why would a development be built on an earthquake fault line unmoored to rock?
Buyers In 2017, 2018 Saw Value Upside
Those who bought units shortly after the disclosure that enjoyed 20% to 30% discounts thought that they would be made whole after the developer fixed the problem. In retrospect, it seemed to be more of a discount for cash since lenders weren’t providing financing for the building.
There was a “global” settlement made to the unit owners by the developer and other defendants that included the $100 million four-year retrofit and reimbursement for the plunge in unit values. No details are available about that.
There have been nine sales this year out of the 400 available units in the building, which is nearly 22 units annually. That’s about a 6% turnover. In my experience with markets that I cover (which are not San Francisco yet), we usually see sales turnover of 5% to 10% of total units, so 6% in this market appears to be reasonable if San Francisco follows the same pattern as markets I cover.
Final Thoughts
With lending returning to the building and transaction volume within the building normalizing, the stigma of this ordeal will probably fade from the market’s memory over time. It is unclear whether prices will eventually normalize. The WSJ’s analysis of pricing seems to suggest the market value penalty is about 20%, but with stabilization comes the potential to eventually normalize.
The Actual Final Thought – I want to say I can’t predict the future of the Millennium Tower or read the minds of market participants, but I recognize that some people have that gift.
Here’s My Podcast: What It Means
The latest episode is a click away as well as the podcast feeds for all the “What It Means with Jonathan Miller (WIM).”
Apple (within the Douglas Elliman feed) Soundcloud Youtube
Did you miss the previous Housing Notes?
June 10, 2025
FARE ACT: A Tenant Is More Likely To Be Bitten By A New Yorker Than A Shark
Image: From The Movie “Jaws”
Housing Notes Reads
- At Millennium Tower, sellers are listing their units for less than what they paid. Millennium Tower Stopped Sinking, but Apartment Values Did Not [Wall Street Journal]
- Judge Refuses to Block NYC Broker-Fee Law Set to Start June 11 [Bloomberg]
- Manhattan Renters Already Paying Record Prices Face More Hikes [Bloomberg]
- Opendoor sheds more employees amid Nasdaq delisting threat [Inman]
- What to Know as the New Broker Fee Law in New York City Goes Into Effect [New York Times]
![[Podcast] Episode 4: What It Means With Jonathan Miller](https://millersamuel.com/files/2025/04/WhatItMeans.jpeg)