A previously-successful developer takes on an ambitious beach project, pours millions of his own dough into it, hires a sales team but doesn’t offer the homes on the MLS, and then runs into untimely delays, cost overruns, and a bad economy.
Don’t you lower the price and get out?
Calls to the sales office during business hours went unanswered – does anyone know how much they are asking?
Jim, I fear for “the silver ghost.” Drive or video but please be more careful. I’m looking forward to more shrimp at your 60th.
anyway, clearly what is happening is that the developer has a construction loan with trigger covenants that start when he closes the first unit. He’s burning the construction loan hoping for a turnaround and will continue to do so until someone pushes him off the pot.
I recall seeing these listed on the website quite some time ago as around $1.5M give or take. It is hard to see anyone paying so much for these because the view is pretty well blocked by motel. If you’ve got the money for these, you can get something much better.
Linky – http://www.theloftsatmoonlightbeach.com/residential/floorplan3.html
Click on the unit to see the price.
Additionally – Bluwater Crossing is open in Carlsbad. Work/live loft concept at Poinsettia Station. I’ve toured those – no oceanview (even from the third floor), too close to the tracks, and very over priced. But, I like the general concept for certain work applications.
These were supposed to start at 2 mill. Right down the street from me.
To each their own I suppose, but you could buy a house in LJ with an ocean view for that kind of scratch.
I wonder if this development will mysteriously burn to the ground some day soon.
I was by the area a few days back ande noticed a banner that read 10% down owner financing–thought that looked interesting!
Obviously the project isn’t going well. The big problem that I read about was that they don’t have the money to pay for the development fees. In Encinitas you pay these before receiving you final certificate of occupancy. Without the cert you can’t close escrow. It’s stand off with the City. Don’t know what’s happened since.
Of course, they are probably looking to re-work their loan and I would guess switch to rentals.
They want $1000 psf. There are superior pending comps in La Jolla for $435 psf and one sold comp in Carlsbad for $458. Developers havent made a payment since January. I spoke to the sales agent a few days back and they said they had a few letters of intent but none have sold. They are asking $3.60 NNN for the commercial units. The market might support $3.00 in that location.
See them at the trustees sale!!!!!!!!!!
Past a certain point, you can’t lower the price without defaulting. And once that threshold has passed, you won’t care because it’s not your money.
I knew one person who was desperately trying to sell and come out ahead by $20K, but the market kept falling and once he realized he couldn’t sell he was totally complacent and not motivated to sell. There was no money to salvage, so it didn’t matter if his house fell another $20K or $200K. Makes no difference to him*.
*It used to fairly recently, when forgiven debt was treated as income.
Way overpriced. That developer is screwed.
Maybe they’ll knock em down like they did in Victorville.
sdbri,
I think that’s right. I think that also explains the complex at 144 N. Rios in Solana Beach, where nothing is selling but they won’t cut the price.
It’s not just the developer who’s screwed. How about the bank?
Did you see what happened to the downtown W Hotel?
Nice, but not $1.7 mill nice
detective jim, nice work
“They are asking $3.60 NNN for the commercial units.”
Holy cow, you can get class A in downtown San Francisco for less than that. Probably Class A in Manhattan now that most of the big banks want to sublease their space out, too.
I’m not sure these prices would have even worked during the boom. I saw a couple of offices like that in Mountain View right next to the Caltrain and a couple miles from Google that got built with these sorts of numbers. They had at least 12 units available. Leased 2 of them and I doubt either tenant will be there long-term. If the Bay Area can’t support it, no way San Diego can.
Maybe they were hoping to lease to real estate agents. 😉
-Erica
This from somebody in the know (allegedly):
14 of the 18 residential units are sold , 10 of the 15 retail/office units are sold. Original price point was $1000 a foot, Price point was lowered 10% to 20% and units are mostly sold.
No delays, project went very smoothly. Just finished and still doing punch list items. There was procedual problem with the city regarding occupancy all at once instead of individual closings but that has been resolved.
Property is well capitolized, the owners are doing the lending themselves and they are being sold through a mostly private network to customers thus no MLS listing.
A few of the stores are just now opening. Residential occupancy is about a month away.
Project bodes well for the larger pacific station project now under construction, 12 months from opening. The 47 residential units will be in the $500 to $600 a foot range. The commercial, 40,000 sq. ft. is entirely leased as is the 9000 sq ft. office.
But then again, there is an outstanding $20 million construction loan from Vineyard Bank, so Rob Dawg probably nailed it.
Here’s a link to the NCT article on the groundbreaking of Encinitas Pacific Station in September, 2008:
http://www.nctimes.com/articles/2008/09/11/news/coastal/encinitas/z89fa104469d85538882574c20012fe13.txt
“This project is going to inject life into our downtown. … Next we’ll work on those quiet zones,” he said, referring to the campaign to silence the train horns that regularly interrupted the groundbreaking ceremony.
Attendees included City Council candidates, downtown business owners, consultants, bankers and others with a keen interest in the development, which is under construction between E and F streets.
City officials and the project’s developer, John DeWald of Cardiff, said Pacific Station marked the start of a new era for Encinitas. Plans call for the project to include a 25,000-square-foot Whole Foods Market, a yet-unnamed restaurant, a series of small shops, office space, and 47 condominiums.
From the NCT article in Jan. 2007:
DeWald said Tuesday that he expects to break ground on the project later this year. A timeline submitted to City Hall pegs the complex as ready for occupancy in early 2009.
DeWald said he is negotiating with grocers and other retail tenants. He would not disclose the names of the businesses.
He said he also is taking names of people interested in buying the condominiums, which would range in price from $500,000 to $900,000.
About Pac Station- these types of developments are hitting all over the nation. Young people are eating them up. Whole foods is very good sign for that area, it means young people, people with money.
But… as seems to be everywhere in SD, there are not going to be many young people with enough money to pay 500k for a 2 bed townhome and shop at whole foods.
250-350k is the mark for this group, so Pac Station may have to find another group of buyers.
There still something just not quite right here in SD.
So much for N. County Coastal being immune to the downturn. A new low in my book was seeing a dollar store shopping cart abandoned in my old neighborhood.
Jim, is it just me or does you new camera have a rubbery kind of image? Whenever you shake a bit the objects seem to stretch left/right. Slow scanout from the sensor?
Mortgage rates going up.
Prices coming down.
Simple math right? But don’t worry, bottom is here according to some experts out there. For those itching to buy, jump in before the interest rate goes up!!
$3.60 NNN?
PPTTHHHT.
We’re special in Orange County. I’ve seen Class A that was $6.50 NNN. Namby Pamby.
This is the true place to make money. Mortgage guys were more than willing to fork out that kind of dough.
That’s why we have see-through buildings galore in Irvine.
Chuck Ponzi
“anyway, clearly what is happening is that the developer has a construction loan with trigger covenants that start when he closes the first unit. He’s burning the construction loan hoping for a turnaround and will continue to do so until someone pushes him off the pot.”
Rob Dawg | June 8th, 2009 at 11:28 am
This is exactly what happened with Barratt in Bressi. All those houses were just shy of finishing (even thought the sales office would tell you they were “sold”) because the construction loan terms ended once the home was finished–sold or not and the construction loan had MUCH better terms. Then all their “buyers” realized that prices were tumbling and they were locked in at too high a price. Barratt refused to lower their prices. All deals collapsed, the banks are left hanging with these unfinished homes now.
JtR- if your source is right, they are kicking ass. I was waaay off.
A few years back they closed down the whole foods grocery store in the current lumberyard Ace Hardware location. Unless the yoga studios start offering classes in printing counterfit money I don’t see pac station making it.
Another wonderful So Cal fantasy comes to life! I bet every unit is sold by the end of June to Arizona Business people who want a second home near the train tracks, err, I mean the ocean…