With available land for new development diminishing in San Diego, more single-family home developers have opted to get in on downtown San Diego's hot residential market. What these builders are finding, however, is that building upward instead of outward carries its own challenges and considerations, which can vary from one project to the next.

"For developers accustomed to building single-family homes in a rural setting, multifamily high-rise can be a very challenging product type," said Yehudi Gaffen, president of construction consulting firm Gafcon. "Downtown builders must deal with a completely different set of permitting and approval processes, as well as quality control and logistics issues. Also, some developers may find themselves interacting for the first time with condo homeowners associations, which have their own unique policies, procedures and politics."

Gafcon currently is working with a number of residential developers building mid- and high-rise multifamily projects downtown to help guide them through the design and building process -- from conceptual planning and site selection, to design team selection, estimating, scheduling, permitting, budgeting, long-term planning and quality control assurance.

"Because we've been so immersed in the downtown residential market, we're in a good position to familiarize developers with the idiosyncrasies of residential high-rise projects," said Ted Bumgardner, fellow principal at Gafcon. "Our role as the construction manager is to act as an extension of the developer's staff to maximize time and cost efficiency, while still giving the developer the control and flexibility to make any necessary adjustments along the way. This can minimize the probability of change-orders, unanticipated construction costs and project delays, all of which can occur more often with this product type."

Who's building up?

Currently, Gafcon is working with Anka Property Group, a Sydney, Australia-based residential/commercial developer, on a planned condominium/mixed-use high-rise located on the corner of Sixth Avenue and Market Street.

"While Los Angeles and San Francisco have downtown residential areas, San Diego soon will epitomize true urban living in California," said Andrew Boyarsky, executive director of Anka Property Group. "We chose downtown San Diego to develop because of its dynamic market and overall appeal as a big city by the ocean. In many ways, downtown San Diego is similar to Sydney. Both offer a laid-back waterfront lifestyle, yet still embody a very lively, cosmopolitan ambiance."

While the Sixth and Market project is nearing the end of the design development phase, Boyarsky says the building likely will emanate an Australian/urban chic flavor to appeal to a mid-market demographic that ranges from young professionals to baby boomers. Austin Veum Robbins Parshelle is the project architect.

To make downtown living more affordable for seniors, Gafcon worked with developer Chelsea Investment Co. and nonprofit organization Senior Community Centers to build Market Square, a recently completed, 200-unit affordable apartment complex located at 525 14th Street between Market Street and Island Avenue.

"With almost an oversupply of luxury units going up downtown, many with unit prices ranging from $250,000 to $3 million and higher, many senior residents have become displaced and/or have little opportunity to live downtown affordably," Gaffen said. "As members of the building industry, we can and should to do more to address the severe shortage of affordable senior housing downtown."

According to Paul Downey of Senior Community Centers, downtown San Diego long has been the home for many seniors living in single-room occupancies, many of which are disappearing as the massive wave of development and redevelopment efforts downtown surge ahead. With the number of seniors in the United States expected to quadruple by 2050, the need for affordable downtown housing will grow substantially in the coming years.

"We brought on Gafcon to manage the construction of Market Square because, although serving seniors is our expertise, building a downtown mid-rise is not," Downey said. "For projects like these, it's beneficial to have an expert walk you through the process and ensure that all project goals are realized."

Gafcon also is providing consulting services for a number of other downtown residential developments. Nancy Cavalry and Wilmur Cooks of Oak Shelter LLC are developing Island-Market Centre, a residential/commercial project bounded by Island, Market, 13th and 14th avenues. D.R. Horton currently is building Union Square, a 262-unit condo complex located at 14th Avenue and Broadway. Gafcon also is helping IB4B, a development group from Abu Dabi (a nation of the United Arab Emirates), perform due diligence to secure a downtown site for residential/mixed-use development.

Other residential developers building upward in downtown include Lennar Communities, Western Pacific, Concordia Homes, Barrett Homes and Bosa Development. Lennar Communities is constructing La Vita, a 304-unit residential high-rise on the block bounded by Cedar, Union, Beech and State streets. Western Pacific is building Park Boulevard, a 221-unit, two-tower complex on 12th Avenue between Market Street and Island Avenue. Bosa Development is building several multifamily projects, including The Grande at Santa Fe, a 39-story condo complex along Pacific Highway. More than 8,600 high-rise condominium units are scheduled to break ground downtown during the next four years.

Appealing to the urban lifestyle

Some downtown developers are finding that a major challenge in "building up" is the learning curve in terms of product design.

"As urban living is a completely different lifestyle than suburban living, developers first need to understand and appreciate that many new downtown buyers are making a significant change in lifestyle," said Bumgardner. "In order for a building to be able to compete with other downtown residential developments, every design element -- from the desired aesthetic and layout, to the construction materials used, to selected features and amenities -- must be carefully planned in terms of what will appeal to urban dwellers."

In particular, many downtown buyers are concerned about having outdoor views, and/or outdoor access from their units. Builders therefore should consider whether their development will offer outdoor terraces or decks, keeping in mind what kinds of views would be available with each unit, either via a balcony or through the windows.

As a case in point, Gafcon is currently managing construction for Allegro Towers, a new 240,000-square-foot, 201-unit apartment/mixed-use building in Little Italy. In response to the desire by prospective buyers for access to the outdoors, Allegro Towers, which will include a 28-story tower, will feature a view deck located on the south side of the 10th floor. Units also will feature expansive bay views. Construction is slated for completion in mid-2004.

Allegro Towers, slated for completion in mid-2004, will include a 28-story tower and a view deck on the south side of the 10th floor.

"San Diego's downtown residential building boom is evidence of a natural evolution: When lack of land prevents you from building out, it's time to start building up," Gaffen said. "And while the downtown residential market can seem daunting, there are experts and resources available to help builders feel right at home."

Kutch is president of Kutch & Co., a full-service public relations agency specializing in integrated marketing for companies within the building industry.