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-   -   SAN DIEGO | Boom Rundown, Vol. 2 (https://skyscraperpage.com/forum/showthread.php?t=126473)

tdavis Dec 23, 2009 9:46 PM

Quote:

Originally Posted by SDDTProspector (Post 4620733)
Well I assume the market for hotels in San Diego is still strong, if they can fill them, build them!!!! The two hotel in cortex hill area are small under 130 rooms each and are the extended stay variety. It seems the only development in the pipeline for the next two years are hotels......

The SD hotels are actually struggling. The W recently chose to go into foreclosure rather than make the payments required. The Marriott (can't remember which brand) canceled plans for another hotel in the Gaslamp area. This caused the City Council to seek reimbursement to the city for monies allocated to this project - still in legal rangling.

The occupancy rates have fallen to 10 year lows, and projections are that 2010 will see 64% occupancy (an 8 year low).

You can google to find many of the stories. Here's just one (which includes some of the projects): http://www.signonsandiego.com/news/2...ting-survival/

voice of reason Dec 24, 2009 4:46 AM

Quote:

Originally Posted by SDDTProspector (Post 4620733)
Well I assume the market for hotels in San Diego is still strong, if they can fill them, build them!!!! The two hotel in cortex hill area are small under 130 rooms each and are the extended stay variety. It seems the only development in the pipeline for the next two years are hotels...... It funny how districts within downtown get hot. Right now it seems cortez hill is getting the most proposals, they actually might get built within the next year too!!!

I am actually happy that the developer Chhatrala Group is creating more realistic/ attractive designs.. They have toned down there designs:slob:

http://legacy.signonsandiego.com/uni..._1m7tower.html

No private projects have any chance of breaking ground in SD in the near future. The commercial, leisure and residential sectors are extremely weak.
Nice to be positive though.

ShekelPop Dec 24, 2009 9:24 AM

Quote:

Originally Posted by tdavis (Post 4620781)
The SD hotels are actually struggling. The W recently chose to go into foreclosure rather than make the payments required. The Marriott (can't remember which brand) canceled plans for another hotel in the Gaslamp area. This caused the City Council to seek reimbursement to the city for monies allocated to this project - still in legal rangling.

The occupancy rates have fallen to 10 year lows, and projections are that 2010 will see 64% occupancy (an 8 year low).

You can google to find many of the stories. Here's just one (which includes some of the projects): http://www.signonsandiego.com/news/2...ting-survival/

I wouldn't use the W to illustrate the effects of a bad economy, they overpaid for that property and took on more debt than they should have. They'd be drowning even in a good economy. But your point is still well taken that travel is unfortunately down overall.

bmfarley Dec 24, 2009 5:34 PM

Supply and Demand!

More supply will bring prices down. Haven't many folks complained about how expensive san Diego is and that high prices drive people and businesses away? Yes, they have.

Nothing is wrong with more supply..... unless of course, you have already jumped in to the market.

pesto Dec 24, 2009 6:28 PM

Actually, there are a lot of things wrong with excess supply: developer bankruptcies; landlord bankruptcies, which leads to poor maintenance; deserted neighborhoods, with vandalism and crime; unemployment; the cessation of urban renewal projects; cutting off of funding for nearly complete projects; adverse publicity for cities and neighborhoods; the snowball effect. And that's without mentioning the hit the owners take on their mortgages or banks being hyper-cautious about lending, which effectively cuts-off the benefits of lower prices.

In other words, everything that has happened in the last three years.

staplesla Dec 24, 2009 6:40 PM

Quote:

Originally Posted by pesto (Post 4621761)
Actually, there are a lot of things wrong with excess supply: developer bankruptcies; landlord bankruptcies, which leads to poor maintenance; deserted neighborhoods, with vandalism and crime; unemployment; the cessation of urban renewal projects; cutting off of funding for nearly complete projects; adverse publicity for cities and neighborhoods; the snowball effect. And that's without mentioning the hit the owners take on their mortgages or banks being hyper-cautious about lending, which effectively cuts-off the benefits of lower prices.

In other words, everything that has happened in the last three years.

I agree totally. We've seen the fall in the residential market, but have yet to experience the full defaults in the commercial market just yet.

S.DviaPhilly Dec 24, 2009 7:14 PM

Picture Updates from Around the Ballpark Area
 
Parkside (low income residential w/church) on island between 13th and 14th is on the verge of being done. Not a bad looking building, I like the greens.
http://i42.photobucket.com/albums/e3...ondec09016.jpg
http://i42.photobucket.com/albums/e3...ondec09017.jpg
Thomas Jefferson Law School - Island between 11th and Park........
http://i42.photobucket.com/albums/e3...ondec09008.jpg
http://i42.photobucket.com/albums/e3...ondec09007.jpg
http://i42.photobucket.com/albums/e3...ondec09014.jpg
http://i42.photobucket.com/albums/e3...ondec09015.jpg
http://i42.photobucket.com/albums/e3...ondec09005.jpg
The Strata - (Luxury Rental Highrise) 10th and Market. Almost Done!
http://i42.photobucket.com/albums/e3...ondec09012.jpg
http://i42.photobucket.com/albums/e3...ondec09009.jpg
http://i42.photobucket.com/albums/e3...ondec09010.jpg
http://i42.photobucket.com/albums/e3...ondec09011.jpg
Project on 10th between G and Market, between Cowboy Star and EVT. Have no idea what they are doing?!?
http://i42.photobucket.com/albums/e3...ondec09013.jpg
The downtown stadium site!! As you can see a lot of hustle and bustle there!!!!
http://i42.photobucket.com/albums/e3...ondec09001.jpg
http://i42.photobucket.com/albums/e3...ondec09002.jpg
http://i42.photobucket.com/albums/e3...ondec09003.jpg
The Library Site, HA!
http://i42.photobucket.com/albums/e3...ondec09006.jpg

SDDTProspector Dec 24, 2009 8:59 PM

Quote:

Originally Posted by voice of reason (Post 4621230)
No private projects have any chance of breaking ground in SD in the near future. The commercial, leisure and residential sectors are extremely weak.
Nice to be positive though.

I dont think the staybridge and spring hill hotel are going after the same market as the W-hotel., They are focusing on the business needs versus the hip vactioning traveler, who is willing to spend $300 a night.... Don't be too shocked to see the spring hill to start in 2010, my buddy at Morely as put a bid out, for work to start in 2010... How about the Residence Inn San Diego Downtown/Gaslamp Quarter, completed in late 2009? I gues you forgot that one.....

I wouldn't say being postive, more like realistic, with construction prices down, players that were staying on the sideline are begining to look at old opportunities..... while other live with there heads in the sand:haha:

tdavis Dec 24, 2009 10:12 PM

Quote:

Originally Posted by SDDTProspector (Post 4621921)
I dont think the staybridge and spring hill hotel are going after the same market as the W-hotel., They are focusing on the business needs versus the hip vactioning traveler, who is willing to spend $300 a night.... Don't be too shocked to see the spring hill to start in 2010, my buddy at Morely as put a bid out, for work to start in 2010... How about the Residence Inn San Diego Downtown/Gaslamp Quarter, completed in late 2009? I gues you forgot that one.....

I wouldn't say being postive, more like realistic, with construction prices down, players that were staying on the sideline are begining to look at old opportunities..... while other live with there heads in the sand:haha:

It's ridiculous for anyone to proceed in this economic environment, unless they have a bunch of capital and can eat losses for a while. And regarding your business traveler comment - business travel is down 15% for 2009, and it's predicted to be down 18% in 2010. Companies have looked for ways to cut costs, and travel was one of the first to be impacted. The continued expansion of Skype, video conferencing, etc. allow for businesses to interrelate that they just couldn't do before.

And regarding the Residence Inn. It was almost scraped at the last minute, but they chose to go forward stating that they had already spent a lot of money and "would lose less by going forward than scraping the whole thing." Either way...not good.

I too agree with the other commenter that it's good to be positive, but you do have to be realistic. When you keep building for the sake of building, creating more glut in the market (whether it's commercial space, residential, hotel), you not only hurt the new project, but you increase the likelihood of older projects defaulting. Many are struggling, and by not allowing them to fill back up with tenants/residents/visitors due to more options, you hurt their bottom line.

sandiegodweller Dec 24, 2009 10:40 PM

Quote:

Originally Posted by SDDTProspector (Post 4621921)
I dont think the staybridge and spring hill hotel are going after the same market as the W-hotel., They are focusing on the business needs versus the hip vactioning traveler, who is willing to spend $300 a night.... Don't be too shocked to see the spring hill to start in 2010, my buddy at Morely as put a bid out, for work to start in 2010... How about the Residence Inn San Diego Downtown/Gaslamp Quarter, completed in late 2009? I gues you forgot that one.....

I wouldn't say being postive, more like realistic, with construction prices down, players that were staying on the sideline are begining to look at old opportunities..... while other live with there heads in the sand:haha:

Why would any reasonable investor/lender make investments in new developments when exisiting new projects can be bought at a fraction of replacement costs?

Buy the debt at a discount. I am sure that you will be able to pick up some of the failed San Diego-based banks' debt on projects throughout downtown for a fraction of par value in the near future. You will end up owning the porperty at a lower basis once the owner loses it to foreclosure.

S.DviaPhilly Dec 25, 2009 12:13 AM

[QUOTE=sandiegodweller;4622034]Why would any reasonable investor/lender make investments in new developments when exisiting new projects can be bought at a fraction of replacement costs?



Which existing new projects are you talking about that can be bought? Just curious

S.DviaPhilly Dec 25, 2009 12:18 AM

Quote:

Originally Posted by tdavis (Post 4622001)
It's ridiculous for anyone to proceed in this economic environment, unless they have a bunch of capital and can eat losses for a while. And regarding your business traveler comment - business travel is down 15% for 2009, and it's predicted to be down 18% in 2010.

I love percentages and predictions! 85% of people agree with me

sandiegodweller Dec 25, 2009 6:17 PM

[QUOTE=S.DviaPhilly;4622102]
Quote:

Originally Posted by sandiegodweller (Post 4622034)
Why would any reasonable investor/lender make investments in new developments when exisiting new projects can be bought at a fraction of replacement costs?



Which existing new projects are you talking about that can be bought? Just curious

Several of the recent projects in San Diego were financed by local banks that have since been siezed by the FDIC. I doubt that man of those assets have gone thru the dispostion process yet but they will be coming.

Here is an article on the disposition process:

FDIC Has $30Bln of Assets to Sell
Sep 25, 2009 - CRE News
Despite seizing 118 failed banks with $476.4 billion of assets since the start of last year, the FDIC has only about $30 billion of assets to sell.

But some $4.7 billion is in the market for sale via three massive structured offerings that are being shopped by Keefe, Bruyette & Woods, Deutsche Bank and the team of Pentalpha Capital Group and Midland Loan Services, respectively. Another nearly $2 billion of loans are being offered through the agency's whole-loan sales channel. And $5 billion of assets from Corus Bank are being shopped that the agency initially had hoped to sell at the same time it transferred the bank's deposits to MB Financial.

Factor those assets out of the equation and the agency's left with only about $18 billion of assets to liquidate.

That's not much given the massive volume of assets that were on the balance sheets of banks that have failed. It could be explained in large part by its practice of entering into loss-sharing agreements with bank acquirers.

To be sure, the agency will see continued growth in the volume of assets it needs to liquidate - it has identified 416 institutions with $299.8 billion of assets as troubled banks. But because its loss-sharing arrangements generally result in lower costs to the agency's fast-depleting Deposit Insurance Fund, it's a good bet more such deals will be completed going forward.

Under the loss-sharing arrangements, a bank's acquirer is insulated from 80% of the losses against assets subject to the agreement. That insulation level could climb to 95% under certain circumstances.

Even though the FDIC has to take capital reserves for the potential losses, it is able to keep assets on the balance sheet of a bank, which could continue to manage them and ultimately liquidate them when market conditions improve.

The agency has found that it takes anywhere from 90 to 120 days from when it takes over an institution to determine exactly what it owns, what it's worth and how to sell it. During that time, assets could deteriorate. So keeping them in the hands of a bank benefits asset values as well.

The agency tried to structure a loss-sharing arrangement when it sold Corus Bank, a Chicago lender to the residential condominium sector that had $7 billion when it failed earlier this month. But because of the complexity of the institution's assets, the due-diligence process took longer than anticipated. The thinking now is that the agency will sell an interest in the bank's remaining $5 billion of assets, keeping a stake itself.

It also kept about $3 billion of assets from Colonial Bank, a $25 billion asset institution in Montgomery, Ala., that failed in August. BB&T Corp. took over the institution's deposits and $22 billion of its assets, with $15 billion of those subject to a loss-sharing arrangement. The remaining $3 billion of assets are related to Colonial's residential mortgage lending operation, Taylor, Bean & Whitaker Mortgage Corporation.

Until recently, its whole-loan sales advisers, DebtX and First Financial Network, had been selling a variety of assets that were dominated by commercial real estate loans. But recent offerings from those advisers have involved only consumer, agricultural and business loans as well as loan participations. The agency has since added Eastdil Secured, Garnet Capital Advisors and Mission Capital Advisors to its lineup of loan-sales specialists.

The thinking has been that the FDIC would rely more on its structured offerings, where it sells only a stake in a portfolio of assets and provides financing, to dispose of residential and commercial mortgages, along with acquisition, development and construction loans.

But an agency spokesman indicated it would continue to rely on a variety of sales channels to dispose of assets. "You can't pigeonhole any asset," he said. "Every portfolio is different." He indicated that the agency might also consider using its structured offerings to dispose of foreclosed properties.

bmfarley Dec 25, 2009 10:20 PM

Quote:

Originally Posted by pesto (Post 4621761)
Actually, there are a lot of things wrong with excess supply: developer bankruptcies; landlord bankruptcies, which leads to poor maintenance; deserted neighborhoods, with vandalism and crime; unemployment; the cessation of urban renewal projects; cutting off of funding for nearly complete projects; adverse publicity for cities and neighborhoods; the snowball effect. And that's without mentioning the hit the owners take on their mortgages or banks being hyper-cautious about lending, which effectively cuts-off the benefits of lower prices.

In other words, everything that has happened in the last three years.

... a bit dramatic, but at the end of the day... prices are lower. No?

TonyAnderson Dec 26, 2009 2:34 AM

Great update.

Austinlee Dec 26, 2009 2:53 AM

I really love this development; Any word on what the latest is for it?

Lane Field

S.DviaPhilly Dec 26, 2009 4:17 AM

Metro Center
 
Or what about the Metro Center Project on 13th and commercial? Is that going to happen? http://www.metrocentersandiego.com It seems like a project that downtown needs.

Also if this does get built and (a long shot now, I know) the stadium downtown progresses this project includes lots of parking attached to it that I am sure could service a lot of the people/cars that are going to the football game

Fusey Dec 26, 2009 5:55 AM

Quote:

Originally Posted by PA Pride (Post 4623013)
I really love this development; Any word on what the latest is for it?

Lane Field

It got killed by the Coastal Commission. I f***ing hate California politics.

tdavis Dec 26, 2009 7:08 AM

Quote:

Originally Posted by Fusey (Post 4623151)
It got killed by the Coastal Commission. I f***ing hate California politics.

My office is working on part of Lane Field - It hasn't been killed. There was a lawsuit file by a neighborhood group which stalled the initial groundbreaking due to this suit. The court stated that a public review period needed to be held, and this was held. In the meantime the economy tanked and things have been slowed, but it's still moving forward.

Derek Dec 26, 2009 9:10 AM

It better be. That parking lot is ugly as fuck. Tell your company that. Do they know that? :P


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