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A few downtown projects keep contractors busy

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The economy may be slow, but a few downtown projects are keeping contractors busy from a new 240-room Marriott Residence Inn slated to open next month, to the Thomas Jefferson School of Law on Island Avenue delayed by mammoth and whale bones.

In a Centre City Development Corp. status report, the agency said Marriott Residence Inn developer J 5th LLC and contractor Reno Contracting are putting finishing touches on the 240-room hotel's exterior.

The project, along the south side of J Street between Fifth and Sixth avenues, also has about 8,000 square feet of retail on the ground floor.

While the Marriott is hitting the market during a very difficult time for the lodging industry, hotel consultant and developer Robert Rauch said the Residence Inn should be a strong performer.

"This hotel is certainly in a very good location. It is in the heart of the Gaslamp and is one of the few extended-stay hotels downtown," he said.

A companion 362-room Marriott Residence Inn by the same developer has been proposed across J Street that would have about 4,000 square feet of ground floor retail. No timetable has been set for this project due to tight financing.

Rauch noted that two factors are keeping new hotels from being started. One is the fact the revenues per available room (RevPAR) have been in a freefall and the other is that occupancies are down significantly.

"The occupancies are down about 13 percent and the rates are also off by about 13 percent. I'm not sure any hotel can get financing in this day and age," Rauch said.

BF Hospitality had hoped to get under way on its 340-room hotel at 719 Ash St. in or before December of this year, but that timetable is likely to slip unless its financing is secured.

If BF were successful in garnering the funding, the hotel, which would also have two condominiums and 5,000 square feet of retail, could be completed by December of 2011.

The planned 89-room Village Hotel by Bell Hotel Ltd. and MGSD Inc. was supposed to get under way early this year but is waiting for the right time to start. The developers still hope that could be as early as December.

The Village, with 1,000 square feet of associated retail, could be opened by June of 2011, but the economy makes that date uncertain.

Not every downtown hotel has fared well in the meantime. San Clemente-based Sunstone Hotel Investors(NYSE: SHO) recently elected to walk away from its W Hotel at 421 West B rather than continuing making payments.

The property is in downtown San Diego but well away from the Convention Center and adjacent Gaslamp Quarter

In contrast, the problem at the new 175,000-square-foot Thomas Jefferson School of Law on Island Avenue between wasn't funding, but fossils on site that slowed foundation work earlier this year.

Work on the project's garage has recently been completed. Bovis Lend Lease is the general contractor on the project now tentatively slated for completion in January 2011.

General contractor Rudolph & Sletten is building two sizable projects for San Diego City College.

One is the Carrier Johnson-designed, 89,000-square-foot, five-story Career Technology Center along the south side of C Street between 17th and 18th streets, slated for completion in February 2010.

An 11-story, 700-car parking garage is planned on the site for the center, as well as the rest of the campus.

The second project is a new 73,000-square-foot science building nearby that is slated for completion in the spring of 2010.

While there may still be a glut of condominiums on the market in downtown San Diego, projects started before the recession have little choice but to make the best of a bad situation.

Units at both the 679-unit Vantage Pointe and the mixed-use 276-unit Smart Corner developments have gone begging in the downturn.

Since Smart Corner opened its doors to residents in September 2007, only a few units have been sold.

Nearly half the remaining unsold units have been converted to apartments and a lease-to-own program was started earlier this year.

Another residential project caught in the downtown is Hanover Development' Strata with 163 apartments and 6,400 square feet of ground floor retail. Strata, which got underway early in the fall of 2007 on the southwest corner of Tenth Avenue and Market Street, is expected to be completed in December.

Many projects on CCDC's list simply have no particular timetable at all.

The Irvine Co.'s proposed 680,000-square-foot office tower at the foot of Broadway still had a listed start date, according to CCDC, of December with completion in December 2011.

But the developer has emphasized the project is on indefinite hold until the economy improves.

That means leasing, and with more than 1.73 million square feet of direct vacant space according to Jones Lang LaSalle (NYSE: JLL), downtown has a lot of space to fill before a new office tower may be justified.

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