From: SF Business Times

Developers who rushed to convert condos to apartments during the darkest days of the economic crisis are dusting off their marketing plans, and in some cases, reopening sales offices.

In San Francisco the developers of the 52-unit Artani at 818 Van Ness Ave. are about to open the sales office about a year after it was abruptly shuttered. The builders, a joint venture involving principals of Paragon Real Estate, have hired Pacific Marketing Associates to help them market and sell the units. At the 130-unit Symphony Towers, developer West Bay Builders has decided to jump start sales on 26 units that were leased out over a year ago.

“We are starting renewed sales at Symphony Towers possibly as soon as next week,” said Kim Cole, vice president of sales for Pacific Marketing Associates.

Between 300 and 400 condos in major projects were pulled off the market and converted to apartments during 2008 and 2009 in San Francisco, with the Artani and the 179-unit Argenta at One Polk St. being the larger projects to be leased out. The number of units converted in San Francisco was small compared with Oakland, where more than 700 condos were yanked from the market and rented.

Oakland-based developer John Protopappas of Madison Park Financial Corp. said he has started getting calls from brokers urging him to start selling the remaining 17 units of the 26-unit 4395 Piedmont Ave. (nine of those units were sold before Protopappas decided to rent out the rest of the building). Protopappas said he is exploring the possibility of converting back to condos, but that he would like to see prices improve at least 10 percent before he makes a move. He also owns the 75-unit condo-to-rental conversion at 901 Jefferson St., which he bought after the lender foreclosed on the original developer, AF Evans.

“Brokers are saying that prices are moving and would you consider selling your units again,” said Protopappas. “Of course we’ll consider selling, but I want prices to go up further. We are not quite there yet.”

Renewed interest in bringing more condos on line may be motivated by timing as much as anything. The $8,000 first-time home buyer tax credit is set to expire in April, a fact that should generate activity at the entry-level price point. In addition, the Federal Housing Administration plans to tighten standards of the mortgages it insures by this summer, which will require buyers to have a higher credit score, pay a higher insurance premium, and in some cases, come up with a bigger down payment than they did previously. Add to that mix historically low interest rates and it makes for a great buying opportunity, said Paul Zeger, president of Pacific Marketing Associates.

“Most developers see a window here,” said Zeger. “They see interest rates are still low, prices have rebounded a little, and consumer confidence is coming back. And they are not sure where interest rates are going to be a year down the road, so that is a big driver.”

Developer Mike Ghielmetti of Signature Properties said it’s still too early to start selling units at Broadway Grand, the 121-unit building his firm decided to rent out in 2008 as the condo market collapsed.

“The market is definitely improving, but there are still issues with the lack of job growth and mortgage credit for condos is still harder to get than during an average market,” he said. “We think a little more time is needed in our submarket. We are looking harder at 2011 than we are at 2010.”

In addition to buildings that have gone the rental route, the market is seeing the return of several projects that were mothballed. In the South of Market developer Walid Mando has hired Polaris Group to start marketing the 69-unit 829 Folsom St., a project that went dark after a previous sales team failed to sell any units.

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