In the mid-2000s thousands of new condominiums were for sale in downtown San Diego. Now with the direct new for-sale figure reduced to around 200, at least one big developer plans to build again.
"I think there are fewer than 200," said Nat Bosa, Bosa Development president from his Vancouver, B.C. headquarters. "The several thousand units built during the last boom are just about full. Bodies are in them."
Bosa didn't provide details but is processing a $250 million to $300 million highrise condominium project downtown.
As noted by the Centre City Development Corp., Bosa entities control several sites in downtown San Diego. They include properties at Kettner and Ash, Broadway and Pacific Highway, First and Island, Pacific Highway between First and G as well as an ownership interest in a property on Cortez Hill.
The Kettner and Ash property is the only one where CCDC has seen a recent submittal from Bosa -- a man who has himself developed thousands of units in downtown. Kettner & Ash, which has received its design review approvals, would be a 285-unit, 35-story highrise with one-, two- and three-bedroom units plus 25,000 square feet of retail at the bottom of the project.
Bosa doesn't pretend financing would be easy.
"The banks have gone from hardly asking questions to asking for your DNA and blood samples," Bosa said before adding that he is confident with low inventory levels, and that he will still be able to make his case.
"And the unemployment rate should be should be under 8 percent at the end of the year. Hopefully it will be 7 ½ percent. That would help," Bosa continued.
Assuming he is able to receive financing, Bosa said he would like to get started on his next generation highrise condominium tower in roughly a year's time.
"The minute the city gets its act together and starts processing plans, we can get going," Bosa said.
There will be more competition for Bosa's units and not just from any remaining first generation sales. First, the project will be competing with hundreds of resold units and other newer units as well.
Secondly, MarketPointe Realty Advisors is quick to point out that the 200 units for sale in the newer projects don't include the estimated 2,000 units that were originally planned as condominiums but are now being rented as apartments to keep them full.
The largest of these is the 679-unit Vantage Pointe development at Ninth and B streets that was purchased for $200 million by Sam Zell's Equity Residential (NYSE: EQR) in late 2010.
While it is intended that Vantage Pointe will remain a rental, in many of these cases, the units continue to be offered for sale as they are rented out. Smart Corner (a Lankford & Associates 301-unit project on the edge of the East Village) is continuing the process of selling as it rents.
Even with those units returning for sale, there isn't nearly as much inventory available as in past years. While units are going back for sale, it isn't as if they were being dumped on the market all at once.
"The inventory is pretty much down now," said Russell Valone, MarketPointe president.
Bosa -- who has virtually sold out his 178-unit Legends property overlooking Petco Park and his 232-unit Bayside at the Embarcadero -- warns prospective buyers at new or even resold downtown projects, there is a limited window when people will be able to buy at the bottom of the market.
"You might pay one price and you will pay 20 percent more three months from then," Bosa said.
For now at least, with interest rates at record lows and prices bottoming out, Bosa said at least some of his units are cheaper to buy than they would be to rent.
"Rents have gone up substantially," Bosa said. "In the Bay Area they have already gone up 15 to 20 percent in the past year."
Valone said downtown new sales prices in the meantime appeared to bounce from $400,000 to $600,000 during the past year, depending on which units were available. He said the market appeared much more volatile than was actually the case, however.
"We're relatively stable at about $500,000," Valone said. "The prices are holding up."
While Bosa definitely sees an improving San Diego economy, he said he would feel better if it weren't so easy for people to walk away from their mortgages.
"People need to be responsible for their actions," Bosa said.
Bosa also worries about the future of redevelopment downtown, now that redevelopment agencies are slated to disappear on Feb. 1.
"I'm hoping CCDC might somehow get a reprieve," Bosa said.