Thanks to SwimJet for pointing out and asking for more information of this project.
Laurel Bay Apartments is on Bankers Hill at the intersection of 5th and Laurel. It's actually a pretty nice building in a good location.
The apartment building was purchased by Hammer Ventures in June 2004 for $56.6 Million and was quickly converted to for sale condos.
There are 150 units in the building, County of San Diego records show that only 41 have been resold. Incredibly County records show only two closings in 2006. Sales are clearly slow for this project and given the price declines that are occuring downtown these condos will not sell at the current prices or the units will go back to rentals.
It's also worth noting that Foreclosure.com shows one unit at Laurel Bay is in preforeclosure proceedings.
SwimJet points out and I've also noticed that this building is very dark and there isn't much going on, this anecdotal observation and the hard facts indicate that this project simply isn't going well for the investors that converted the apartments into condos.
Based on my calculations there is around $32 Million dollars worth of condos sitting empty up on Bankers Hill. I arrived at this calucation by subtracting the total units sold as well as the resale of the commercial condos (~$7 Million) less estimated sales costs.
Could this be San Diego's first apartment conversion gone bad? As the national housing bubble deflates many of these projects are giving up on going condo.
You have to wonder how the 41 people that did but into the project will react when the remaining 100 units go back to rental status.
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I drive past this development everyday on my way to work. Periodically I call to see if they’ve reduced their prices. When I first called a year ago, they said they had no plans to reduce their prices. About 3 months later they said they “had a meeting about it,” but decided not to lower prices. 8 weeks ago, they said “we are not lowering our prices, but no reasonable offer will be refused.” In my mind, it is a prime example of greed, and being unrealistic about the market. That development sits between 4th and 5th which I call The Ambulance Artery, as every ambulance leaving the local hospital goes down 4th and up 5th with sirens screaming both ways. In addition, the building sits below the flight path. Lastly, the balconies are not open, and wide, but rather caved-in and dark and boxy. The building itself is not ugly, but who in their right mind is going to pay $300K for a studio? If the owners got realistic about their pricing, and did a rent-to-own program, they might actually get their money back on it.
That's funny as I called a few times too about price cuts and they were very firm about no price cutting.
I suspect that the company that is doing the conversion did the deal with razor thin margins and with the market going down they are actually underwater in the venture however they are being stubborn about taking the loss. Like many people who are positive about the market they likely were thinking that the "Spring rally" would take them out of problem. No rally, same problem, indeed the problem is getting bigger.
Hammer Ventures is also doing 101 Market Street downtown which is in a very similar situation saleswise.
It's interesting that you picked up on the ambulances, I was in the building and didn't think much about, a few days later I had drinks at Mister A's and realized that yes ever five minutes an ambulance screams by, that would drive you crazy! Much worse than the train.
I just heard from someone in the Corporate housing business that 777 6th lofts are going the same route...repartments. What a joke
The ambulance artery! I live at the bottom of the hill on 4th right before you get officially into downtown and yes, it gets loud but you get used to it. Same deal with the airplanes. It's all the loud cars and motorcycles that make somewhere unbearable, so avoid living on a street that take people onto the freeway!
I bet if they ever lower their prices you people would be the first in line. Why else would you care about their prices? It seems like you're in love with the building but simply cannot afford a unit there. Why wouldn't you love it though, I mean all their great amenities and perfect location amid balboa parking. It's not downtown so you don't have to even worry about the congestion. I happen to know a few people that live there and they love it.
I actually do like Laurel Bay, the prices are bad though.
The point of this blog is the watch the marketplace, if prices are going down that has nothing to do with my or any other posters on this blog personal finances.
The prices are actually very competitive for the area. When was the last time you were in there? They've actually changed. You might want to take a look. Oh, if there so bad in prices and your keeping an eye on the marketplace then why did they just have 4 sales in one week and all of their competitors either had cancellations or zero sales. This building wants quality not quantity. It was built for a certain type of buyer with a certain type of lifestyle not just a cheap place to live "downtown". You try selling 4 downtown residential properties in a week at any reasonable sd price.
Actually I like this building quite a lot.
The timing of your post is interesting as this news item also references this project:
http://www.signonsandiego.com/news/business/20070111-9999-1b11condo.html
Have they cut prices?
I know San Diego quite well.
Real estate has been my livelyhood for 30 years.
A few years ago I moved out of state, but missed having a place in San Diego as a 2nd home.
Today, I purchased a unit in Laurel Bay.
Location, quality, value, the Life style it offers made it a wise choice--for me.
The sellers were cooperative. I feel it was a win/win sale.
BTW I lived many years on 6th ave. Yes there is noise, but you do get used to it.
Hey you're living in the City, with all it has to offer.
You want quiet? the City is not for you.
Lot's of quiet suburbs out there, Enjoy your Home Depot week ends.
Laurel Bay has one redeeming quality. Location. You can't beat it even with all the "city noises" Welcome to the city. This ain't the burbs. But I have to tell you, I know the whole story about Laurel Bay and it was pure greed from the banks point of view. They stepped in and took sales management control over from the developer but still wouldn't budge on price. They knew they would lose money but wanted to minimize loss. But they were still greedy and missed the mark completely. Now they will definitely have to convert back to apartments to stop the bleeding or continue to pay a management fee to the current sales company who is doing a horrible job of selling. My pity goes out to all the residents who bought in to this project and are stuck with a horrible HOA that is constantly fighting and can't move things forward. If you like an apartment feel, this is a great place to live. :) If you like real quality construction, I suggest a steel and concrete structure. This place you can hear your neighbors above and even below you. But I guess if you like hearing the elephant walk above you, then this is a great place to live.
It's funny that you mention that the Laurel Bay sales staff is doing such a horrible job when they are far outselling all of their competition and maintain good quality relationships with the homeowners that they have sold too and the agents that have accompanied them. Laurel Bay has had very few cancellations with the new sales team and is great to get along with. I think you are a confused person. They arent converting back to apartments either. That's misinformation. And as for the "horrible HOA", the fees are the lowest you can get downtown and there are only about 2 or 3 people that can't get along. As with every complex you that exists. You cannot please everyone all the time.
Anon,
It sounds like you have some level of inside knowledge about Laurel Bay. How are sales going there? Keep in mind the original blog post was from July 2006 so much has changed.
Also who actually owns the unsold condos? Is Hammer still involved?
I don't know what you're all talking about...it's a great building. We live on the 4th floor, have a big balcony facing the water, a loft, and three full baths. The seller was extremely cooperative, the sales staff professional and helpful, and we are thrilled with the condo. Plus, the HOA fees are ridiculously cheap compared to other condos downtown. In addition, the building is not actually in the flight path but adjacent. You can barely hear any plane noise--the insulation and windows are good quality. We have had no complaints about any "ambulance artery". Maybe if you're on the sidewalk it's loud but our home is quiet and comfortable.
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