Potrero Hill is a very hit or miss neighborhood. If you can't walk to restaurants, or are backed up to a public housing development, or are practically on top of a highway, or in the middle of an industrial zone (or in some cases all 4 of these) you may never get the appreciation that other parts of Potrero Hill might see. In a market where buyers are taking their time doing their due diligence, I strongly advise getting to know the neighborhood's ins and outs. And then buy location, location, location. If you can walk to 18th & Connecticut you're probably in a great location, so do a 1/4 mile to maybe a 1/2 mile radius search (via the MLS - try http://www.automated-homefinder.com) for properties. You can sell a well located property in any market, and when it's up, it will be up the most.

As for future appreciation.... it's been an up and coming area for quite some time, so I'd suggest at least a 5 year outlook, if not 10, if you want to see appreciation over other parts of the city.

Yes! Potrero will do very well with the completion of UCSF's hospital, bio research and other assorted businesses going in to Mission Bay. That area will be transformed into a very busy and dynamic area. Proximity of housing will then go for a premium for everyone that wants avoid commuting.