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Apartment Owners Benefit From Climbing Home Prices

Apartment Owners Benefit From Climbing Home Prices

Condo in La Jolla Gets an $18M Settlement From Developer, Builders

Real Estate

by Mandy Jackson, Staff Writer

The dramatic appreciation in the price of homes in San Diego County to a median of $304,000 continued to benefit the apartment market in the first quarter of 2002, according to a report by Hendricks & Partners.

However, according to the Phoenix-based investment advisory firm specializing in multi-family properties, demand for apartments decreased slightly in the first quarter of 2002.

According to Hendricks & Partners, low interest rates helped more families afford homes, but the war in Afghanistan prompted some military families to move from the area.

The vacancy rate increased from 2.4 percent in the first quarter of 2001 to 4.6 percent for the first quarter of 2002.

More affordable submarkets are seeing lower vacancy rates. The Lemon Grove and La Mesa markets are at 3.5 percent, while Hillcrest and Mission Valley are at 5.6 percent.

Rents increased at a slower rate in the first quarter, growing only 4.4 percent from an average of $1,041 at the end of March in 2001 to $1,087 a year later. The previous year’s increase was 10.3 percent from March 2000 to March 2001.

Investor interest in local apartment properties remains strong, with 33 properties changing hands in the first quarter compared to 29 properties in the first quarter of 2001. The average price per unit increased from $69,484 to $91,801.

Permits issued for new apartment construction fell to 1,275 units in the first quarter from 1,608 in the first three months of 2001.

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Settlement: The Pacific Regent La Jolla Residential Condominium Association won a settlement of $18 million from the developer, builders and subcontractors that built their 11-year-old condominium tower in La Jolla.

Atlanta-based Law Crandall Inc., an engineering firm that designed repairs for the property, was also required by the jury to pay $674,520 to assist in the building’s repairs. Attorney Bryan M. Garrie, of San Diego-based McGregor & Garrie LLP, represented the homeowners association.

The 22-story, 148-unit condo tower was damaged by water that leaked in through the exterior siding, windows, sliding glass doors and balconies. The siding material, known as exterior insulation and finish system, does not have the internal drainage system that traditional stucco construction has, according to Garrie. Mold was growing in the walls and steel components were corroded.

Garrie said Law Crandall has not filed an appeal, and he does not know if the company will. The other 26 defendants have paid their share of the $18 million settlement. The main defendants were Pennyfarthing Development Corp. and Van Maren Construction Group, both of British Columbia, and Tucson, Ariz.-based The Fountains, the current retirement community operator.

The settlement and jury award will pay for the repairs at the property. Massachusetts-based Simpson, Gumpertz and Heger Inc. is the engineering firm designing the repairs.

The homeowners association began mediation with the defendants in November 1998, a lawsuit was filed in March 1999, and the three-week trial began April 2 of this year.

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No More: June 27 was the last day that San Diego-based Burnham Pacific Properties Inc., a retail real estate investment trust, was traded on the New York Stock Exchange.

As of June 28, Burnham Pacific’s remaining assets and liabilities were transferred to the BPP Liquidating Trust. Scott Verges, Burnham Pacific’s president and CEO, and Douglas Wilson, president and CEO of San Diego-based Douglas Wilson Cos., are the trustees of the organization.

Each Burnham Pacific shareholder will receive one unit of beneficial interest for each share of the REIT that it owned.

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Anniversary: San Diego-based architectural firm, Robbins Jorgensen Christopher, is celebrating 10 years of design.

James Robbins, Roberta Jorgensen and Janene Christopher founded the firm in 1992. The company has been involved in 273 projects with a total construction value exceeding $160 million. It has three offices in San Diego, Newport Beach and Palm Springs.

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Quick Sell-Out: Newport Beach-based William Lyon Homes sold out 25 homes in 15 minutes when it released the first phase of its Summerwood and Tanglewood neighborhoods in 4S Ranch near Rancho Bernardo on June 8.

Models are under construction and will open in the fall. The two- to four-bedroom homes are priced from the low $300,000 range.

– – –

All Leased: GMAC Commercial Mortgage Corp. of Pennsylvania has leased 5,000 square feet for $860,000 in the Plaza Del Mar III office building at 12544 High Bluff Dr., making the facility 100 percent leased.

The building’s developer and property manager is San Diego-based Janez Properties. Dick Balestri of CB Richard Ellis represented GMAC in the lease negotiations. John McPhillips of Janez Properties represented the building’s owner, New Plaza Holdings.

The four-story, Class A building completed in June 2001 is the third Janez-managed property in the Plaza Del Mar office complex in the San Diego Corporate Center.

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Final Notes: Los Angeles-based commercial real estate services company Insignia/ESG has promoted Jim Hughes to managing director in its San Diego office. … Selling 43 homes, Talavera at 4S Ranch by Del Mar-based Davidson Communities, was the leader in sales for inland North County in the first quarter of 2002, according to Meyers Real Estate Information Inc. San Diego-based Ninyo & Moore completed a geotechnical design evaluation for proposed reconstruction and expansion of Fire Station No. 12 for San Diego. Tucker Sadler Noble Castro Architects of San Diego is designing renovations for three San Diego Unified School District elementary schools: Audubon Elementary School in Sweetwater, Fulton Elementary School in Encanto and Chavez Elementary School in Logan Heights. Pacific Coast Foam, based in Mira Mesa, will provide exterior foam accents for the 34-story Manchester Grand Hyatt Hotel expansion in Downtown San Diego.

Send residential and commercial real estate news to Jackson via fax at (858) 571-3628 or via e-mail at

mjackson@sdbj.com.

Call her at (858) 277-6359, Ext. 114.

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