In San Diego County, there is a lack of available land according to professional during a real estate meeting, which is changing the forms of commercial development.
Gary London, a speaker at the London Group meeting at the Hilton Garden Inn in the Carmel Valley area and president of the London Group Realty Advisers stated, "The Otay Ranch projects are the last of a breed of master-planned communities. The only way we’re going to be able to accommodate the people coming (mostly births over deaths) is to build up rather than out."
A London Group principal, Alan Nevin explained that even at Otay Ranch, "no new large lot releases will happen prior to 2015."
Larry Clemens that developed the Avaiara property in Carlsbad added, "Where there is land, in the East County, for example, the predominant owner is the federal government." Clemens went on to explain that the long processing time is also an issue. In addition, when the Academy of Our Lady of Peace school planned to build a parking garage along with science buildings it to an entire 8 years to get entitled. "The new NIMBY [not in my backyard] doesn’t want any development," Clemens said.
London stated that when you take the large land tracts out of the picture, brown fields that have major toxics problems along with old shopping centers that are worn are getting a once over for new projects.
"Millennials [people born between 1980 and 2000] are going to continue to demand apartments," London stated. "Most of us aren’t going to be building single-family, and the price of housing is going to be significantly bid up."
Nevin also commented on the changing demographics in San Diego that is always mixing it up. He stated, "Two thirds of all housing units have no one living in them who is under 18, and only one in seven households consist of a mom and dad and two kids. The ‘Leave it to Beaver’ years are over." He went on to say that 25% are living alone.
"The apartments are basically full," Nevin stated.
When he looked at the office market, he explained that while Class A vacancies are now in the single digits in a few submarkets, the Class B and C are completely different.
"Of the 120 million square feet of office space in this county, 80 million of it is in B and C space that has higher vacancies," London stated. "I don’t think we’re going to need to build any more office space."
He went on to say that most businesses are not using file cabinets which means office space can be less, therefore the demand for office space will also decrease. On the other hand, he explained that The Irvine Company might choose to develop a 700,000 square foot office tower at West Broadway and Pacific Highway close to the bayfront in downtown San Diego that has been lying on the shelf.
Robert Rauch, the developer for the Hilton Garden Inn, stated the county has around 58,000 hotel rooms, but will see another 600 added this year.
Rauch also stated that occupancies, even at their worst, still averaged about 60%, before returning to the over 70% ranges within the past year.
He said he is concerned that if a deal is not worked out between the White House and Congress over sequestration, recreational travel and business may stop spending.
For now, he seemed cautiously optimistic. "I think we are probably in the fourth or fifth inning of the recovery," Rauch stated.
Another London Group principal specializing in retail, Bill Speer said that the sector has recovered faster than many would have expected.
He explained that around 50 million square feet of retail space is under construction at this time in sixty projects across the United States. He went on to explain that locally, there was expansion and ongoing development at many of the seven Westfield malls which is a good sign of retails resilience.
"You’ve seen the UTC expansion. Now, $200 million to $300 million worth of redevelopment is planned at Horton Plaza and another $200 million to $300 million is also planned at Plaza Camino Real in Carlsbad," Speer stated.
If you are in search of the perfect location for your new business in San Diego or your new dream home in one of the communities surrounding San Diego, contact a San Diego real estate agent today at 888-865-5055.
Recently, in the U-T business section, there was a featured story that stated homes sales surge and home prices rise in San Diego in April.
Just from that alone, the sign is that the housing market is now going in the right direction. However, this may not be true. The truth is there are many different stories all centered on the housing market. One day you will read foreclosures are down, the next short sales are down, and then home prices are slightly up. Everyone reads this as good news and the housing market is on the road to healing.
Before you start believing all this, you really need to learn more about the root of the problem and what it does to the housing market in San Diego. The current standings in San Diego are as follows.
As reported by zillow.com, 36% of homeowners are underwater in San Diego County.
Foreclosures are truly down in the San Diego County; however, this only means that the defaults are finally clearing out.
Wave of Foreclosures Coming
It is estimated that another wave of foreclosures is coming. These foreclosures are going to affect borrowers that took out Option-Arm and Alt-A mortgages. These loans gave home buyers low interest rates and low monthly payments. What is going to bring on more foreclosures is that the low interest rates on these loans are going to be reset this year and again in 2013. This can increase the mortgage payment around 50%. The home values are now at a 10 year low and due to the increase in the mortgage payments, many homeowners will decide on defaults or short sales as they will not be able to afford the higher payments.
It is estimated that Carmel Valley is going to be the hardest hit in the foreclosures upcoming. The main reason is that during the construction boom from 2000 to 2008, many homes were purchased with no down payment or small down payment, which means homeowners do not have a lot of equity in the home. The median income in Carmel Valley is $90,000 with higher end salary families have been able to stand firm, things are on the swing to change.
The news may not be great; however, San Diego County has a way to go before the housing market will be back on track. There are going to be more foreclosures, more short sales, more strategic defaults and possibly a flat line or decline in property values. Once all this occurs, San Diego will then begin to see some healing in the housing market. Just pay attention to the news in the housing market. If you notice several months of good news, then you can rest assured the worst is over and healing is on the way. A few good stories once in awhile are a false euphoria and may not last.
Now is the time to purchase a home in San Diego at wonderful prices. Contact one of our local Realtors today at (888) 865-5055 to find your new dream home.
In California, the top selling United States master plans in 2011 included in 4th position Irvine Ranch in Orange County, Otay Ranch in 21st in Chula Vista, in 38th position you will find Harlan Ranch in Fresno, Sun City Shadow Hills in 42nd in Indio, and in 47th is Carmel Valley in San Diego, Westpark in 48th in Roseville, Valencia in 49th in Los Angeles, and in 50th position is Del Sur in San Diego.
- Irvine Ranch developed by The Irvine Company sold 764 properties.
- Otay Ranch developed by Otay Ranch New Homes/Baldwin & Sons sold 242 properties.
- Harlan Ranch developed by Wilson Homes sold 175 properties.
- Sun City Shadow developed by Pulte/Del Webb sold 165 properties.
- Carmel Valley developed by Pardee sold 147 properties.
- Westpark developed by Westpark, LLC sold 146 properties.
- Valencia developed by Lennar/Five Points sold 145 properties.
- Del Sur developed by Standard Pacific/IHP Capital Partners sold 142 properties.
Home Pricing is Key
Peter Dennehy, vice president at John Burns stated, "The bottom line is" and went on to say," The things that are selling are priced affordably…If you’ve got the right price and a nice, clean project, then people start to respond."
New home sales are a bit higher than what was seen in 2010. The figure for December of 318 units is quite a bit below the figures seen during the boom such as in September of 2004 at 1,640.
If you are in the market to buy a new home contact one of our San Diego Homes experts at (888) 865-5055 today and receive VIP Service!