doma San Diego, California Project Type: Residential Case No: C Year: 2005

Transcription

1 doma San Diego, California Project Type: Residential Case No: C Year: 2005 SUMMARY doma is a 121-unit, market-rate condominium building that comprises lofts, flats, and townhouses ranging in size from 725 to 1,600 square feet (67.4 to square meters). The block-sized project combines two distinct design typologies: a modern, eight-story industrial-themed concrete structure on one end of the site and a more traditional four-story wood-frame townhouse component at the other. Located in the Little Italy neighborhood of downtown San Diego, it was designed with mid- to high-end buyers in mind the building includes open space, top-of-the-line appliances, granite countertops, and ample deck space. Eight of the townhouses are shopkeeper units in which the living space is placed directly above a storefront. FEATURES Transit-oriented development Mid-rise building

2 doma San Diego, California Project Type: Residential Subcategory: Multifamily Volume 35 Number 09 April June 2005 Case Number: C PROJECT TYPE doma is a 121-unit, market-rate condominium building that comprises lofts, flats, and townhouses ranging in size from 725 to 1,600 square feet (67.4 to square meters). The block-sized project combines two distinct design typologies: a modern, eight-story industrial-themed concrete structure on one end of the site and a more traditional four-story wood-frame townhouse component at the other. Located in the Little Italy neighborhood of downtown San Diego, it was designed with mid- to high-end buyers in mind the building includes open space, top-of-the-line appliances, granite countertops, and ample deck space. Eight of the townhouses are shopkeeper units in which the living space is placed directly above a storefront. LOCATION Central Business District SITE SIZE 1.38 acres/0.56 hectare LAND USES Downtown Housing, Condominiums, Townhouses, Multifamily Housing, Loft Housing KEYWORDS/SPECIAL FEATURES DEVELOPER Transit-oriented development Mid-rise building CityMark Development 701 B Street, Suite 1100 San Diego, California Fax: ARCHITECT Martinez + Cutri 750 B Street, Suite 1700 San Diego, California Fax: PLANNER Project Design Consultants 701 B Street, Suite 800 San Diego, California Fax:

3 LANDSCAPE ARCHITECT Deneen Powell Atelier 2805 El Cajon Boulevard San Diego, California Fax:

4 GENERAL DESCRIPTION A block-sized mid rise that includes units in townhouse, loft, and flat configurations, doma is among the first of a wave of new urban housing projects in downtown San Diego. The structure stands between an arterial street and a trolley line in a traditional pedestrian-scale community. It combines two distinct design typologies, with a modern, eight-story concrete loft structure on one side of the block and a more traditional four-story wood-frame townhouse section on the other. The latter showcases the historic asset of a restored art deco style store and clock tower on the corner of the site. Targeting mid- to high-end buyers, the 121 market-rate condominiums in doma range in size from 725 to 1,900 square feet (67.4 to square meters). In addition to lofts, flats, and townhouses, the development contains eight shopkeeper units, with living space over storefronts. To compete successfully within a burgeoning market for urban housing in San Diego, the development team chose to invest in bold architectural features, a courtyard, high-quality materials, generous decks, high ceilings, and strong connections to the three adjacent pedestrian streets. SITE doma occupies a full block at the western edge of the Little Italy district of downtown San Diego. The neighborhood is named for a multigenerational Italian fishing enclave with a strong cultural heritage that continues to this day. Single-family homes, small apartment buildings, and family stores form the core of this walkable neighborhood, which city planners would like to perpetuate and expand. Nearby India Street has been improved as a pedestrian paseo, and is now dotted with outdoor cafés and restaurants. The 60,000-square-foot (5,574-square-meter) site lies three blocks east of the San Diego harbor, 1.5 blocks from the trolley station and also near commuter rail and bus lines. It is bounded on the east by busy Kettner Boulevard and on the west by California Street, which holds a below-grade trolley corridor. The aforementioned landmark 1930s commercial building, with a clock tower and entrance on the corner, dominates the southeast corner of the block. At the meeting of two city street grids, the block is an irregular trapezoid, tapering toward the west and sloping down in that direction with a 15-foot (4.5-meter) grade change. These conditions allow for water views on three sides of the project. Along with the nearby bay, the building is positioned to offer views of La Jolla, Point Loma, Mission Hills, and the downtown skyline. While the two dead-end side streets, Date and Fir, are low-traffic view corridors, the bayside view corridor displays California Street and the trolley line in the foreground. As demand for downtown residential units increases, Little Italy is undergoing a transition that is balanced with an emphasis on neighborhood heritage, including the traditional Saturday street market and numerous festivals and community events. Well positioned to be a part of the life of the neighborhood, doma is close to the city s office and commercial core. It also lies within blocks of Interstate 5, with easy access to most of the landmarks of the greater San Diego area. DEVELOPMENT CityMark, the developer of doma, is a San Diego based company founded in 2000 by Rich Gustafson, president, with Vince Hoeningman, vice president, and Russ Haley, vice president and CFO. Gustafson and Haley grew up in San Diego and previously worked for Shea Homes San Diego division. Hoeningman, a San Francisco resident who holds a master s degree in urban planning, has had a career in the software industry. doma is one of CityMark s two initial downtown projects. Construction on a much smaller 16-unit townhouse project, located at nearby Cortez Hill, had just begun as design was being completed for doma in the fall of The firm also started and finished a townhouse development in the center of nearby La Mesa during the time that doma was under development. Prices throughout the southern California residential market have soared since Prior to that year, very little market-rate housing was available in downtown San Diego, and the full scope of demand for such housing was not anticipated by developers or the financial community. Since 2001, the year that CityMark acquired the site and sought financial partners for doma, the number of downtown market-rate housing units has tripled, with demand increasing exponentially. Then the events of September 11, 2001, stunned the financial community nationwide. As CityMark sought construction backing in the wake of the disaster, the project was turned down by 90 different potential equity partners. In addition to the historic events, the developers also found that the site location along a train track and the noise generated by passing trains were significant obstacles for lenders. The lenders, most of whom were based out of town, did not recognize that the trolley could be considered an amenity, and were unaware that many high-end projects were also located along the trolley lines. In the end, the project s location at the edge of downtown San Diego and near the stretch of waterfront owned by the Port of San Diego proved to be strategically advantageous.

5 With its local office, Comerica grasped the market potential for doma, and approved a construction loan for the project. Since the completion of doma, CityMark has gone on to develop three more mixed-use projects: M2i, a block-sized, 230-unit mixed-use loft building with ground-floor retail space near Petco Park (baseball); Fahrenheit, a 77-loft project with shopkeeper units; and the Egyptian, an 80-unit mixed-use development in the Hillcrest neighborhood to the north, which includes affordable housing. FINANCING As one of the first new urban infill projects in the neighborhood, doma carried inherently high financial risks and demanded strong commitment from backers. Over two years passed from the start of sales until the project was ready for move-in. With the San Diego urban residential market only in its early stages of growth and the unsettling events of September 11, 2001, third-party equity placement was difficult to find. CityMark initially funded the entire equity requirement. With construction underway and a healthy sales performance, Strand Capital, a Vancouver-based equity placement company, provided subordinated debt, which replaced much of the required equity in the project. A construction loan from Comerica was based on 65 percent of value and 80 percent of cost. The expectation for financial performance was a 30 percent internal rate of return, which was met and exceeded. The project was sold out before it was complete. Preferred mortgage lenders for finished units were Sterling Capital and Wells Fargo Mortgage. DESIGN Designed by Anthony Cutri a partner in San Diego based Martinez + Cutri Corporation, a firm whose portfolio includes institutional and urban design projects in addition to mixed-use and multifamily developments doma is a blend of architectural styles. The north part of the block is occupied by a modern, eight-story cast-in-place concrete loft building. It faces the street with expansive loft windows and large decks. This section of doma is industrial in structure and concept, expressed in raw concrete and steel. At the top, the massing is softened by two successively stepped-back floors, rising to a third level in some of the two-story lofts. The loft building meets the street on the north side with small, private decks and steps down to the sidewalk. On the southern side of the block, a four-story wood-frame townhouse building conjoins structurally and aesthetically with the historic store and art deco clock tower on the corner. Although it is not officially registered or protected as a landmark, the clock tower and two facades of the old store were completely restored, and the space inside was renovated to be leased by CityMark for retail use. The three wings of the wood-frame townhouse section wrap around three sides of the block. In the center, the aforementioned common courtyard provides semiprivate open space. It also opens the townhouse wings to natural light from two sides and exposes the loft section to southerly light. The shopkeeper units are on the east side of the block, fronting on busy Kettner Boulevard. With a storefront on the ground floor and a three-level townhouse above, these units were intended to add life to the street in the form of small, neighborhood-based businesses, and constitute one of three distinct living options at doma. On the east and west elevations, metal-clad carriage units serve as the transition between the loft building and townhouse wings. On the east side, the passage from public sidewalk to courtyard lies under a three-level loftlike unit. On the west, there is a fitness center under two levels of flats, with a common roof deck on top for water views, outdoor relaxation, and entertaining. With its multifronted site, combined building types, and oblique angles in plan, the design of doma yielded a total of 57 different floor plans in a mix of one- and two-bedroom units. The mixture includes lofts, flats, townhouses, and shopkeeper units. There is one reception lobby on the northeast corner of doma, and another just north of the clock tower commercial space on the corner. The west side of the townhouse section features two layers of flats atop two-level townhouses, and on the east side a layer of flats lies above the shopkeeper units. The two-level townhouses at the base of the south perimeter can be entered from steps on the street or from a double-loaded corridor behind, and there is another layer of two-level townhouses on top. With the exception of shopkeeper units and some on the courtyard, all of the units are entered from double-loaded corridors. Two-story lofts with mezzanines take up the first six floors of the loft building, and the top two are high-ceiling (11- and 12-foot/3.3- and 3.6-meter) flats, some with skylights. They typically have exposed concrete walls and floors. Throughout doma, units have walk-in closets, spacious master bathrooms and bedrooms, and kitchens furnished with granite countertops, European cabinetry, and stainless-steel Whirlpool appliances. Buyers were offered a set of standard buildout plans in the loft units of doma, with a number of optional walls that could be added to divide the

6 spaces into more conventional rooms. Most buyers opted not to add partitions, however. To address the difficult condition of a rail corridor on the west side, the designers of doma placed the parking in a concrete platform underneath the residential floors. The platform buffers the dwelling units from some of the noise and visual distraction of the trolley line, while windows and balconies from the third level up offer western water views. There are two levels of parking below grade that contain 226 parking spaces enough to offer 1.8 parking spaces per unit sale. The garage also includes 65 storage units measuring 80 square feet (7.4 square meters) each, which were sold as buyer options. Although the zoning code allows for a buildout of 6.0 floor/area ratio (FAR) on the site, the mid-rise design selected by CityMark represents a more modest 4.2 FAR. This choice was driven, in part, by cost considerations, but it also provides for a gentler first step for a neighborhood in transition from single-family dwellings and small commercial buildings to multistory, mixed-use development. In keeping with the code, the outer walls of the sixth, seventh, and eighth levels along Kettner step back at a 45-degree angle after reaching 50 feet (15.2 meters) in height. The previous owner of the doma block had conceptually designed a 113-unit apartment building of Type III construction namely, masonry walls with steel studs and joists. After investigating the advantages and disadvantages of this construction type for mid-rise multifamily housing, CityMark and Cutri settled on the hybrid design described earlier. The combination of Type I (concrete-frame construction) and Type V (wood-frame construction) building categories resulted in a blended cost that yielded a similar total to typical Type III construction; however, the combination allowed doma to rise three additional stories on one side with more loftlike character, and increase the total yield of units. MARKETING AND SALES Immediately after purchasing the site, CityMark began an aggressive publicity campaign, engaging a marketing communications firm, Roni Hicks & Associates, to lead the effort. Regular press releases about the progress of the development and its features were issued. As a result, over 50 articles about the project appeared in local newspapers, from trade publications to metropolitan dailies, from 2001 through 2003 a critical time for sales and presales. The marketing firm won numerous industry awards for the effort. Forty of the 121 units were reserved within days after presales commenced in May Prudential New Home Sales, the sales partner of CityMark, then opened an office in a storefront two blocks north of the site. Metal placards, mailed out as invitations to the opening, drew compliments and sales traffic. Although the terrorist attacks on September 11, 2001, dampened financial backing for the project and caused a lull in sales, presales resumed at a steady pace of about one per week until all the units were taken just prior to completion in the spring of The restored corner retail unit is retained and leased out by CityMark. As with the rest of the thousands of new housing units now coming on line in downtown San Diego, buyers tend to be empty nesters and baby boomers who have raised families elsewhere. The second-largest group is young urban professionals ranging from 26 to 35 years old. Another important buyer group is business executives who are semiretired or retired. Initial sales for all units in doma were within CityMark s projected target range, and a handful of resales have shown robust appreciation in value. Between 2001 and 2003, sales prices for the one-bedroom units ranged from $240,000 to $450,000 and from $330,000 to $700,000 for the two-bedroom units. By 2005, sales prices for the one-bedroom units had increased to $375,000 to $550,000, and to $450,000 to $900,000 for the two-bedroom units. EXPERIENCE GAINED As a design experiment, doma yielded several lessons for developers of market-rate urban housing: Type I concrete construction can be appealing to contractors, enabling them to deliver a project with greater speed and certainty than possible with other construction materials. It helped keep doma on time and under budget. As an architectural device, generous deck sizes can increase the attractiveness of a multifamily project, adding individual identity to different units and articulation to the entire composition. Far from wasted, outdoor square footage is especially marketable, particularly in areas with mild climates and/or views. Wrap-around decks at corners multiply the value of the outdoor square footage. Because the largest buyer group for downtown condominium units is empty nesters who have owned homes in the past, amenities such as parking and storage space are important selling points. For many buyers, the choice to live downtown goes hand in hand with a commitment to a more urban, contemporary aesthetic. When presented with a package of buildout options that included additional walls and finishes in the loft units, most buyers opted for the open plan and unfinished concrete walls. Shopkeeper units at doma sold very briskly. They were the first to go. The buyers, however, were not shopkeepers at all, acquiring the commercial space as a for-lease investment instead. The two-level units in both the loft and townhouse sections of the project were more desirable to buyers than

7 the flats. In retrospect, the developers would have designed the project with a greater number of two-level units and a smaller number of one-level units. A strong, steady public information campaign can boost awareness of and sales in an innovative and risky project and produce a ripple effect in the redevelopment of a neighborhood. In San Diego, a city that is essentially without traditional factory loft architecture, doma has proven that there is high demand for urban loft-style housing. At the same time, the project has shown that more traditional housing typologies, such as townhouses with street entrances, will be sought out by buyers eager to live downtown. Small, traditional businesses all around the district have benefited from the construction of doma and other new housing in the neighborhood. Casual observations since doma s construction suggest that business is booming in established restaurants, the total number of which has approximately doubled. There is also a proliferation of small shops and boutiques along the streets of Little Italy. In 2003, CityMark won the award for best attached housing product in San Diego County from the Sales and Marketing Council of the Building Industry Association.

8 PROJECT DATA LAND USE INFORMATION Site size (acres/hectares): 1.38/0.56 Gross density (units per acre/hectare): 88/220 Number of off-street parking spaces: 229 RESIDENTIAL INFORMATION Unit Type Number of Units Area (Square Feet/Square Meters) Percentage Sold Townhouses ,600/ Lofts and flats ,500/ DEVELOPMENT COST INFORMATION Site Acquisition Cost: $7,200,000 Site Improvement Costs: $13,110,000 Construction Costs: $10,340,000 Soft Costs: $15,550,000 Total Development Cost: $46,200,000 DEVELOPMENT SCHEDULE Planning started: August 2000 Site purchased: August 2001 Sales started: August 2001 Construction started: September 2001 Project completed: May 2003 DIRECTIONS From San Diego International Airport: doma is less than 2.5 miles (four kilometers) from the airport. Exit to North Harbor Drive and turn left onto West Grape Street. Then turn right on Kettner Boulevard. doma will be at 1780 Kettner Boulevard. Driving time: Five minutes in nonpeak traffic. Clair Enlow, report author Jason Scully, editor, Development Case Studies David James Rose, copy editor Joanne Nanez, online production manager This Development Case Study is intended as a resource for subscribers in improving the quality of future projects. Data contained herein were made available by the project's development team and constitute a report on, not an endorsement of, the project by ULI the Urban Land Institute. Copyright 2005 by ULI the Urban Land Institute 1025 Thomas Jefferson Street, N.W., Suite 500 West, Washington D.C

9 doma is a 121-unit, market-rate condominium project located in the Little Italy neighborhood of downtown San Diego.

10 Comprising a modern, concrete loft structure on one side of the block and a more traditional wood-frame townhouse section on the other, doma combines two distinct design typologies.

11 With its multifronted site, combined building types, and oblique angles in plan, the design of doma yielded 57 different floor plans in a mix of one- and two-bedroom units ranging in size from 725 to 1,900 square feet (67.4 to square meters).

12 The two-level units in both the loft and townhouse sections of the project were more appealing than the flats to buyers. In retrospect, the developers would have included more two-level and fewer one-level units.

13 In addition to lofts, flats, and townhouses, the development contains eight "shopkeeper" units, with living space over storefronts. These units sold very briskly; the buyers, however, were not shopkeepers at all, acquiring the commercial space as a for-lease investment instead.

14 At the meeting of two city street grids, the block where doma was built is an irregular trapezoid, tapering toward the west and sloping down in that direction with a 15-foot (4.5-meter) grade change. These conditions allow for water views on three sides of the project.

15 doma site plan.