The pace of San Diego County hotel property sales has slowed down considerably since the first half of 2011, but a high-end resort in Del Mar could be among the next to change hands.
A flier recently published by the brokerage firm Eastdil Secured LLC said the New York-based company, which has offices in Los Angeles and San Diego, “has been retained as exclusive adviser to solicit offers” for the 121-room L’Auberge Del Mar.
Eastdil officials could not be reached, and a representative of the hotel’s current owner, L-O Del Mar Holding Inc. of San Francisco, said the company would have no comment on the matter.
L-O Del Mar purchased the hotel in 1994 for $12 million, according to CoStar Group.
The ocean-adjacent property, at 1540 Camino Del Mar in downtown Del Mar, underwent a $26 million renovation in 2009 and is operated by Destination Hotels and Resorts.
Alan Reay, president of Irvine-based hospitality consulting firm Atlas Hospitality Group, which is not involved with L’Auberge Del Mar, estimated that the hotel in today’s market could fetch between $60 million and $66 million, or approximately $500,000 to $550,000 per room.
If it does get sold, L’Auberge would be the latest among a few smaller boutique properties to change hands recently, as the San Diego region has generally seen a drop-off in high-profile, big-hotel property deals over the past year.
A newly released midyear report by Atlas Hospitality notes that California hotel property sales were down sharply in the first half of 2012 compared with the same period a year ago. While the number of transactions rose 8.9 percent, the total dollar volume dropped 39.1 percent.
In San Diego County, the drop was more pronounced. The seven transactions of the first half represented a nearly 70 percent decline from a year ago, and the $37.3 million dollar volume marked a 97.5 percent drop.
A key reason is that today’s local deal landscape is focused primarily on smaller properties. Atlas notes that the largest transaction of this year’s first half was the $28 million purchase of the 90-room Inn at Rancho Santa Fe, by JMI Realty.
Compare that to a year ago, when the biggest deal of the first six months was also the biggest in the United States: Host Hotels & Resorts Inc.’s purchase of the 1,625-room Manchester Grand Hyatt for $570 million.
In that same first half, Sunstone Hotel Investors Inc. bought a majority stake in the 1,190-room Hilton San Diego Bayfront hotel for $475 million.
“The first half of 2011 saw a record number of transactions and especially larger hotel sales, so we expected to see a decline in dollar volume as well as a decline in the number of larger hotel sales in this year’s survey as compared with last year,” Reay said.
However, the state as a whole has recovered to where it is now on a pace to match the transaction level of the pre-recession peak of 2007, which saw 343 deals made in California for the year.
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Local Office Market Makes National ‘Tech Twenty’: San Diego places 15th in a ranking of the nation’s top 20 high-tech office markets, compiled by researchers at commercial brokerage firm CBRE.
CBRE’s “Tech-Twenty” ranking is based on growth of high-tech services and office rents over the past two years. Based on Bureau of Labor Statistics data, researchers reported that San Diego’s high-tech jobs grew 5 percent and high-tech office rents rose 4 percent during the period.
The top U.S. market was San Francisco, with 41 percent job growth and a 44 percent rise in rents. New York City, Silicon Valley, Raleigh-Durham, N.C., and Baltimore rounded out the top five.
San Diego ranked sixth in the nation for rent growth, 12th for net absorption growth, and eighth for its vacancy rate decline.
Among the top 20 high-tech submarkets, Sorrento Mesa placed 12th in the nation for rent growth, 14th for net absorption growth, and 17th for its vacancy rate decline.
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Westcore Buys Fremont Property for $45.6 Million: Westcore Properties of San Diego has purchased Kato Industrial Park in Fremont for $45.6 million. The seller was New York Life Investments, formerly known as McMorgan Co.
Westcore Properties Chairman Marc Brutten said the Fremont transaction is the company’s largest acquisition this year. The four-building Kato property is in close proximity to Silicon Valley, the San Francisco peninsula and East Bay markets.
“Additionally, the project includes five acres of undeveloped land which gives us room to expand,” Brutten said.
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Ramsay Orders Up Hotel Makeover: Downtown San Diego’s Keating Hotel recently underwent some significant changes at the hands of the famed but less-than-subtle chef Gordon Ramsay.
The property, at 432 F St., was scheduled to be featured on the Aug. 27 episode of Ramsay’s new Fox TV show, “Hotel Hell.” It’s the hotel equivalent of the popular “Kitchen Nightmares.”
Send commercial real estate and development news of general local interest to Lou Hirsh via email at email@example.com. He can be reached at 858-277-8904.