bubbleinfo.com

From the latimes.com:

A long-running dispute over who would manage the Aviara resort in Carlsbad, Calif., has been settled, with Park Hyatt emerging as the new operator. By summer, it will no longer be known as Four Seasons Resort Aviara.

Last year, real estate investors who own the hotel said Four Seasons, which managed the property on their behalf, was spending too much money keeping up appearances in a depressed market. They wanted to eject the fancy hotelier and bring in another operator. Four Seasons, the owners said, was to blame for financial mismanagement and breach of its fiduciary duties to the owners.

Four Seasons, which has a reputation for luxury, denied the allegations and declined to leave the Aviara. Four Seasons is known for securing elaborate contracts with owners that ensure it will be able to maintain hotels according to its standards.

An arbitration panel found this week that Four Seasons did not breach the management agreement or its fiduciary duties to the owners, led by Broadreach Capital Partners. The panel determined, however, that both parties contributed to the demise of their business relationship and that the management agreement should be terminated, according to a joint statement by Four Seasons and the owners.

Hyatt Hotels Corp. said Tuesday that Broadreach and co-owner Maritz, Wolff & Co. selected Hyatt to manage Aviara as part of its luxury Park Hyatt portfolio. The company expects to assume management of the hotel June 21, when it will become known as the Park Hyatt Aviara Resort.

From the U-T’s version:

The arbitration panel concluded that both sides had “contributed to the demise of the business relationship.” As part of the termination agreement, Broadreach was ordered to pay compensation to Four Seasons. According to previous court documents, Four Seasons signed a 30-year contract in 1995 to manage Aviara and had three 20-year options to renew.

Hat tip to Rick the Tuna for sending along this nctimes.com article – an excerpt:

“There’s a lot of entrepreneurs here, a lot of independent thinkers,” said John DeWald, whose company is building perhaps the most visible manifestation of Encinitas’ business future —- the $50 million Pacific Station project under construction on Coast Highway 101, which will encompass five stores and a restaurant on the ground floor, 9,000 square feet of offices on the second and third floors and 47 condo units, also on the second and third floors. All but one of the retail spaces have been leased and 750 potential buyers are on the interested list for the condo units, which are projected to range in price from the “high $300,000s” to $1 million, DeWald said.

“People who live here, shop here,” said Bart Smith, an architect whose office and studio are housed in what used to be a TV showroom, a block off Coast Highway 101.  Smith said Web designers, computer engineers, green-related businesses and other architects are refurbishing old commercial space in the city core, often to create live-work arrangements. For example, a car repair shop off Coast Highway 101 converted second-floor storage space into apartments.

“All kinds of brainiac people are moving in here,” Smith said. The new businesses often subdivide older buildings that used to house one company into units that house several smaller ventures.

Hard-to-measure intangibles also appear to be part of what is drawing businesses to Encinitas.

“People here get involved in the community,” said Justin Faulconer, owner of Falcon’s Bodyboard Shop, which just opened on the northern section of Coast Highway 101 in Encinitas.

Encinitas’ apparent ascension as an entrepreneurial hub defies easy explanation and raises questions about trends in shopping, development policies, the post-recession economy and how Southern California and the nation have changed.

Among those questions: How effective are redevelopment districts and other incentives for businesses?

Many buildings in the older section of the city along Highway 101 have been renovated or restored and yet the city hasn’t declared the older sector of the city a redevelopment district, said Peder Norby, Highway 101 Corridor coordinator for the city of Encinitas. Designating an area as a redevelopment district brings incentives and tax advantages to businesses that locate in such zones.

The coastal city’s success in keeping its older district vibrant is more a factor of its “unique” downtown flavor and mix of small boutique malls along El Camino Real than forgoing a redevelopment district, said Knight, the chief executive of the San Diego North Economic Development Council. Elsewhere, redevelopment agencies have been proven to work, he said.

For those who are outside of the earthquake zone and wondered what it was like, here’s a youtube shot today in Brawley, about 50 miles north of the epicenter:

From Mr. Nevin at MP Advisors:

With the release of our latest audit for San Diego, we get the most up to date look at the apartment rental market in San Diego.  The report reveals a truth that has been true for some time – it is pretty hard to find a better place to own apartments than in San Diego

With over 117,000 units included in the survey, our apartment vacancy rate sits at 4.75%. That would be a desirable rate to have in the best of times, let alone in the face of broad domestic economic adversity. The national vacancy rate is at an all time high of 8%, but that doesn’t even begin to approach the vacancy factors seen in some of the more damaged rental markets.

Our neighbor to the north, the 800 pound gorilla of the apartment world, had vacancy rates nearly a point and a half higher than ours. San Francisco, was over ¾ of a point behind us in vacancy. The only two other major apartment markets in the country competing with us in terms of vacancy are Washington D.C with a 5.9% vacancy rate and New York at 3%. New York will always enjoy the kind of supply / demand ratio to maintain these kind of figures, and the District, of course, operates under virtual economic immunity when a Democratic administration is in office.

During the height of the last decade, many of the Sunbelt markets were seen as darlings for major investment and these markets are in shambles right now. Orlando, Dallas, Las Vegas, Charlotte and Phoenix all have double digit vacancy rates.

The best part of the deal for San Diego apartment owners, is they have been able to keep low vacancy with very little rent concessions. Rents are off 2% from their peak but are 20% higher than they were in March 2005.

Occupancies and rents are only part of the picture though, the other side is the market for buying and selling these projects.  The combination of strong operating metrics for apartments in San Diego, weakened cap rates from 2-3 years ago, severely obtunded credit markets and a media proclaimed impending commercial real estate collapse, have resulted in no one selling who doesn’t have to.  Since rents are relatively unchanged, NOIs are relatively unchanged and even with 75% LTV financing, these properties do not cash flow much differently than they did 2 years ago. That means very little distressed selling. The majority of distressed apartment sales in San Diego are actually failed conversions.

A search of Loopnet for San Diego apartment projects with at least 10 units that have been listed for sale this year turns up 38 listings. Of these 38, 5 or 13% of them are asking prices at lower than 5 ¼ cap rate and thus are really not doing much more than fishing, that leaves 33 projects for sale. Of the 33, nearly all are “C” properties, at best.  Looking for institutional grade apartment projects in San Diego? Better pack a lunch.  Further complicating the issue is the fact that there are hardly any market rate apartment projects under construction.

So for those who were fortunate enough to get in the driver’s seat in the San Diego apartment market, their cup overfloweth… for the rest, remember that patience is a virtue.

Jeeman was gracious enough to let us tour his new residence in Rancho Santa Fe – but then he sat down for a conversation about his homebuying experience:

It is rare that anyone will go on camera to talk about their own personal choices and decisions.  My experience of Jeeman is that he is a humble guy, yet he was willing to expose himself and describe how he managed buying a home in this uncertain environment – with nothing to gain but the hope of helping others who are grappling with the same decisions.

THANK YOU JEEMAN!!!

The 7th Annual SOHO Historic Home Tour is next Sunday, March 21st.  Enjoy a self-guided tour of six Arts & Crafts homes, designed by Irving J. Gill, William S. Hebbard, Frank Mead and Richard Requa between 1904 and 1913.  My Mom is going to be here next weekend, and I’m hoping to take the whole family!

From the U-T (click here for full article):

“I was 17 and in high school,” Cunning said, and at one point, Eleanor turned to her and since she had no children, remarked, “Someday it’ll be yours.”

Today, that simple promise has turned into a potentially million-dollar makeover to restore what is believed to be San Diego’s first Prairie-style residence, designed by one of its premier early architects, Irving J. Gill, a student of Frank Lloyd Wright. It’s also noteworthy as one of the few homes of the period that used lower-cost single-wall construction and for being part of a clustered housing arrangement around a common courtyard.

But for now, the house hidden behind a gate and a line of tall trees is a drafty, grimy mishmash of old and older design styles and awkward spaces not ready for 21st-century living.

“It’s a little embarrassing to have a house that is a treasure that’s in this condition,” she said.

Even in its unreconstructed state, the 4,000-square-foot-house will make a star turn, open to the public for the first time next Sunday, as the Save Our Heritage Organisation offers a self-guided tour of this storied avenue near Upas Street at the northwest edge of Balboa Park.

This is where San Diego’s merchant prince, George W. Marston, built his house in 1905 and other relatives and friends erected their own homes, many designed by Gill, whose reputation has grown over the decades as a pioneer in the less-is-more Modernist movement. SOHO operates Marston’s residence, also on the tour, as a house museum.

“It’s a street where some of the most famous families lived,” said SOHO Executive Director Bruce Coons. “It has some of the best architecture of the period and of course by one of the greatest architects. It’s one of the streets that is the least changed, and the houses are very much the way they have been.”

A view of the eastbound 56 freeway, then turn north on I-5 at 5:30 in the afternoon: