A Los Angeles company that specializes in building and managing large apartment complexes is making its first foray into San Diego County with plans to build 996 apartments in Mission Valley/Allied Gardens.
An affiliate of G.H. Palmer Associates, Mission Gorge Properties, of Los Angeles acquired the four parcels that make up the 22.7-acre site from two private families for $48.6 million.
“We’ve long awaited the right opportunity to develop in San Diego,” said Steven Fink, chief investment officer of G.H. Palmer.
Fink said the project would “bring “resort-style living to the community.” He declined to say how much the complex would cost to build, but said G.H. Palmer owns and operates $5 billion of apartment projects in Southern California and plans to expand its presence in San Diego.
Plans call for construction to start with land development in May 2020 and actual construction of the apartments themselves in March 2021.
The first of the apartments will be available to rent in the summer of 2023, Fink said.
The apartments will be a mix of studios, one-bedroom and two-bedroom apartments, ranging from 550 square feet to 1,150 square feet.
The project also will include 37,500 square feet of ground-floor space for offices and commercial and retail space and a 5.3-acre neighborhood park along the San Diego River.
Monthly rents have yet to be set, but Fink said they would be market rate.
Location Is ‘Biggest Amenity’
Fink said the project will be “highly amenitized” with “state of the art technology,” pools, gyms barbecues, a conference room and business center.
The location of the project is its biggest amenity, Fink said, overlooking the San Diego River, the new park that G.H. Palmer will build and the Admiral Baker Golf Course.
The owners of the property got the required entitlements in 2012, and gave the project a name — Riverbend — but never intended to actually develop the property by themselves, said Kevin Nolen, a Cushman & Wakefield broker who worked on the sale.
G.H. Palmer will rename the project.
Since 2012, the property owners have been looking for someone to either partner with them to build it or buy it.
Large Scale Project
The catch was that few developers are capable of handling a project that big, Nolen said.
Typically, developers focus on projects with 200 to 400 apartments, Nolen said.
The G.H. Palmer project is “one of the largest apartment developments in San Diego in a number of years,” Nolen said. “Outside of what Hines is doing with the golf course on the west end of Mission Valley, this is really the only other large scale project.”
Hines is planning a $2 billion redevelopment of the Riverwalk Golf Club that will include 4,300 apartments with a possible mix of some condominiums.
The G.H. Palmer project “will be a game changer for the Mission Gorge/east Mission Valley market,” said Rachel Parsons, a director with the brokerage Moran & Co.
“It will totally gentrify that market,” Parsons said. “It will continue to transform that area.”
Although this will be G.H. Palmer’s first project in San Diego, Parsons said, “They’re obviously a high profile, significant developer.”
“G.H. Palmer is really a major significant developer up in Los Angeles and have always built significantly large trophy multifamily assets,” Parsons said “They build beautiful projects, they build very large scale.”
The site of the G.H. Palmer project is vacant land that’s used to store industrial equipment, said Mark Marquez, who was the lead broker on the deal with Pacific Sotheby’s International Realty.
The project “kind of raises the bar in the community,” Marquez said, adding that, the development “kind of fits in with the story of higher density, live, work, play in Mission Valley.”
‘Renaissance of Development’
“Mission Valley is experiencing a renaissance of development in the current cycle. Residential developers have led the path back to Mission Valley, with office developers watching the type of residents in the area who may want to work nearby.”
The area in the vicinity of the project “was once an older, established community,” Marquez said. “Now it’s going to be much more of a destination.”
Strong Demand for Apartments
Nolen said the demand for apartments in Mission Valley and environs remains strong.
Countywide, Colliers International reported that investors are snapping up apartment complexes, with year-to-date sales totaling $1.7 billion, a 36 percent increase from the $1.3 billion in sales in the first nine months of 2018.
Among the notable sales cited by Colliers International was the April purchase of Vora Mission Gorge at 4440 Twain St. by R&V Management from the Hanover Co, for $149 million.
The G.H. Palmer project will likely appeal to people who work in Mission Valley and people who live farther north in Kearny Mesa or along the Interstate 15 corridor who want a more urban feel but don’t want to be in the center of downtown, Nolen said.
Brokers working with Marquez and Nolen on the G.H. Palmer transaction were Tim Winslow and Jason Kimmel of Cushman & Wakefield.