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ColRich Sees Multifamily Opportunities in the South County

COLRICH

Co-presidents: Graeme Gabriel, Danny Gabriel.

Financial data: Not disclosed (privately held).

No. of local employees: 35.

Headquarters: San Diego (Rose Canyon area).

Year founded: 1977.

Company description: Developer and investor in residential communities and commercial properties, currently focused on apartments.

Key factors for success: Company touts balance of projects in single-family and multifamily segments since its founding, with presence throughout San Diego County and other regions.

The U.S. Olympic Training Center in Chula Vista will soon be getting a high-profile neighbor, with work now under way on a total of 427 apartments being developed by a partnership of locally based ColRich and Resmark Apartment Living of Los Angeles.

The two firms recently announced a joint venture to develop two apartment communities on a 19.6-acre site in the master-planned community of Eastlake. The companies have not divulged financial terms, including the expected dollar amount of their investment in the project.

Ground preparation got started in January, with vertical construction expected to be well under way during the current quarter and project completion targeted for early 2013.

ColRich leaders are looking to bring more apartments to the South County, as demand rises with an improving economy.

New Territory

South County apartment construction is somewhat new territory for San Diego-based ColRich, said Chief Operating Officer and co-president Graeme Gabriel, noting that the company over the past 35 years has owned and built several apartment properties but focused much of its ground-up development efforts in the single-family arena.

Like several area developers, it is now responding to a climate where apartment demand has been rising among young consumers entering the workforce, as well as others for whom home-buying remains a financial stretch.

“Given the dynamics of the current housing market and what’s available in the South County, we felt that apartments would be the best product at this time,” Gabriel said. The company will be scouting future opportunities in South County, as that region has relatively more land available for development than other parts of the county.

Ziv Cohen, chief operating officer of Resmark Apartment Living, noted that parent firm Resmark Cos. also is a longtime veteran of the local single-family housing industry, having developed communities throughout San Diego County. Its projects include work in South County with locally based Corky McMillin Cos.

The market, however, is currently favoring apartments, thanks to the youth demographic forming new households, general barriers to entry for new residential construction projects and limited land availability.

“San Diego has the characteristics that make us want to be planning new projects in the multifamily area,” said Cohen, whose company owns apartment buildings throughout the West Coast.

According to a recent first quarter report by the brokerage firm Cassidy Turley BRE Commercial, San Diego County apartment rents are expected to increase over the next two years amid continued tight supply relative to demand. The region’s apartment vacancy rate remains among the nation’s lowest for major metro areas, at 4.43 percent.

The average countywide rent rose 2.56 percent over the past year, to $1,361. Coastal submarkets continue to post the highest rents, with East County and South County remaining the most affordable.

Gabriel said developers have not finalized planned rental rates for the Eastlake apartments. The western 9.5-acre portion of the property will have 209 residences configured as 170 three-story townhomes and 39 homes in a triplex plan; while the eastern 10.1 acres will have 218 residences, developed as 158 two-story townhomes and 60 units in a triplex plan.

The apartments will be managed by Dallas-based Lincoln Property Co., the fourth largest property manager in the United States.

The privately held ColRich was formed in 1977 by Richard Gabriel, Barry Galgut and Colin Seid, shortly after the developers left their native South Africa. It currently employs about 35 locally and its daily operations are now led by Gabriel’s sons, Graeme and Danny, the company’s co-presidents.

An entity known as ColRich Residential, which is 50 percent owned by a division of Resmark, was formed in 2004. ColRich over the past three decades has purchased and developed multifamily, residential, retail, office and hotel assets.

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