In the largest residential boom in Downtown’s history, thousands of new renters and homeowners are expected to move in between now and next December. Retirees are mingling with baby boomers preparing to enjoy life at the hub. “Downtown will be the heart of the city,” says Olga Paras, a new resident at 235 On Market. Olga is 70 and her husband, Chris, is 78. They moved into the new condominium in September and say they feel like little kids now. “This is the happiest time of our lives,” Olga says.

The Parases sold their Mission Bay condo in anticipation of moving into a smaller, more centrally located home Downtown. They purchased their unit at 235 Market a year and a half ago, “before they even started construction,” Olga says. The best thing about living where they do now, she says, is that she has less housework and they have easy access to everyplace they want to go. “It’s like a little city in the city.”

Olga couldn’t have said it better. That is exactly what most developers see in San Diego that encourages them to build here. Today, 23 projects are in various stages of construction and will add about 1,875 new homes to the Downtown market by December 2002. “San Diego Downtown is unique because everything is there,” says Joe Werner, chief operating officer of British Columbia-based Intergulf Cascadia. “Everything’s in one place. It’s a very livable area, very safe, and has a great view.” Keith Fernandez, president of Intracorp, says his San Diego company likes the way the city is laid out with water exposure and the way Interstate 5 encapsulates Downtown.

Nat Bosa, the pioneer of Downtown high-rise living, says he was naturally drawn to San Diego after being involved in the Vancouver market. “I was sold on the idea that baby boomers are going to find that Downtown living is a great alternative because of the distance to travel to work and, basically, the way of life,” Bosa says. “It really caught on in Vancouver and Downtown living has been great in New York for a long time and in established cities around Europe. Basically when I saw San Diego, it was beautiful, it was clean and it’s got everything. It was just missing high-rises and low-rises Downtown.”

These three developers are creating the biggest projects in San Diego’s Downtown. Intracorp is completing and selling four projects: 235 Market, Crown Bay, Porto Siena and Pacific Terrace, which include 288 units. Only about 60 units are still available. Intergulf has developed the 330-unit condominium project Treo@Kettner, which has 75 percent of its units in escrow, and Bosa is working on Discovery@Cortez Hill and Park Place and has completed Horizons, which total about 607 units. Horizons only has four penthouses available, Park Place is 75 percent filled and Discovery is 65 percent sold.

With all of this housing, are enough people interested in moving in to more projects planned for Downtown? These guys are banking on it.

“All of Intracorp’s projects have received a great response,” says Earl Houston, director of sales. For its first few projects, Intracorp had waiting lists for buyers. “Now there is a lot more competition (for buyers), especially in the high-rise sector. We’re one of the only low- to mid-rise developers. So there’s a lot more options.” Intracorp is offering projects on a smaller scale today to lower the price range. “It’s an affordability issue,” Fernandez says. “The market has slowed in the higher-end range.” At 235 Market, units average 1,200 square feet. “Our target is the $200,000 to $450,000 price range, whereas a lot of the high-rises, will start where we end, at about $400,000.”

Porto Siena.

Bosa and Intergulf are building high-rise projects, all with more than 20 floors. Sales are competitive at this level, but tend to target different pools of buyers. With units for sale for less than $350,000 and home owner association fees between $230 and $310, the Intergulf project is seeing a lot of first-time buyers. This is something Werner says the company aims for. “(Buyer) resistance hits at $450,000,” he says. “Anything above $400,000 is slower.” Treo@Kettner has one-bedroom units for sale starting from the low $200,000s and two-bedrooms starting at the low $300,000s. A waiting list is kept for the smaller units. Werner says $175,000 was the lowest price of the one-bedroom, one-bathroom unit with about 650 square feet. “The luxury product is wearing thin,” he says of the grander projects. “There are more options for buyers now.”

Bosa is offering everything. Units begin at $200,000 at Discovery and go as high as $5 million for a penthouse at Park Place. These high-rise projects are full of amenities to pamper homeowners, but with the amenities come higher association fees. It pays to shop around. Discovery touts itself as providing buyers with more bang for the buck. “I’ll put Discovery up against any product Downtown,” says Brett Schaffter, a sales representative for Bosa’s projects. “The level of amenities and price point can’t be beat.”

If it’s amenities buyers want, Bosa aims to please. A pool, Jacuzzi, party room, office center, 24-hour concierge and more all can be had for $400 to $480 a month in association fees. “This is 22-story, high-rise luxury,” Schaffter says.

Located near Seaport Village, Park Place is the highest-priced housing Bosa has offered in San Diego. HOA fees run from $525 to $625 a month and unit prices start at $400,000. Penthouses will be selling for up to $5.25 million. And yes, there are buyers at all levels, Schaffter reports.

Baby boomers and empty nesters are the predominant buyers Downtown. Focus groups and market studies reveal that the “amenities” Downtown has to offer are drawing buyers. “I think it’s the lifestyle down here,” Fernandez says. “We have a lot of restaurants, we have Ralphs, we have Horton Plaza, and we have all the stuff that’s on the water, we have the theater. We are close to a lot of things down here. (Intracorp San Diego) has buyers from Seattle, San Francisco, Phoenix, Orange County, L.A., one in Portugal and Chicago.” He says for many of these buyers, this is a second home; others are retired and coming out here. Some are young professionals, but a lot fewer dot-comers than several months ago. The majority of Intracorp’s buyers are relocating from Rancho Santa Fe and Del Mar. Werner says Intergulf is seeing doctors and lawyers looking to buy, and that most of the e-economy buyers have disappeared. “They are being more realistic in today’s market,” he says. “They are not buying the penthouses anymore.”

Chris Stai, 28, is the proud owner of a new one-bedroom unit at Treo. Now renting in Poway, he was looking for something between $200,000 and $230,000. An associate director of leasing for Investcore Industrial Properties, Stai did his homework on what Downtown has to offer and found his options were limited. “I didn’t want to overspend,” he says. “And I knew prices would be high with HOA fees.” He found Treo to be just right. “It’s away from the Gaslamp, but close enough to walk. It’s right by the train and will be close to the ballpark.” The stainless steel appliances, data hookups, high ceilings, westerly view and underground parking also helped him decide.

Stai works in University Towne Centre and sought a central area to live. He used to work Downtown and says he missed the area. Into the culture and waterfront, he knew where he should settle. Here, he says, he’s close to boating and has multiple places to go running, two of his favorite pastimes. Yes, come August 2002 when he moves in, he will have to commute, but he will be going the opposite direction of traffic. He can’t wait. “It’s time,” he says. “I can furnish it and call it home.”

With so many of their projects filling before completion, developers already are busy planning more. Intergulf’s Werner sees a good long-term market in San Diego County. “It’s a diverse market,” he says. “The R&D industry is immune to the economic cycle.” Despite a record burst of residents, Werner says Downtown is still underbuilt and that Intergulf is planning a few more developments. He doesn’t see the pool of buyers drying up anytime soon. In fact, as more places are built and more people are drawn to the activities Downtown, things will begin to fall into place and become more affordable.

Still, the stalled ballpark is affecting some housing sales in the area. An Intercorp survey revealed buyers perceive the “ballpark stoppage” as a stop to all redevelopment of the Gaslamp. “I suspect that we’ve seen an impact,” Fernandez says. “Part of it is the ballpark and part of it is the amount of product on the market. We’re probably doing as good or better than most of the projects.”

Houston says he wouldn’t classify this as a slowdown. “It’s more of reality setting in,” he says. “It’s not the feeding frenzy that was once out there that was really above where the market should have been in reality. It’s slowed to what’s more manageable now.”

But others aren’t influenced by the ballpark. “It’s just the cherry on top of everything else,” Schaffter says of Bosa’s projects. “It will simply put a bigger smile on people’s faces.”

Overall, sales have not slowed, but foot traffic has. It came as a surprise that during the week of the terrorist attacks in New York and Washington, D.C., Intracorp and Bosa had units sell. Intergulf sales manager Brian Connelly also reported one sale and one reservation for Treo during the same week. The current market shouldn’t have an impact on the developers either; they each have a solid finance plan. Bosa purchases the land and has several financiers he has been working with for 15 years. He has no problem getting loans but says he won’t build unless he knows sales will be solid. “If I’m not comfortable, I’m not going to build just because you give me the money,” he says.

Intracorp purchases the land before starting construction and uses multiple lenders to finance the development. “We’re able to structure our acquisition of the dirt in such a manner that we don’t have to close until we break ground,” Fernandez says. “In all four projects, we closed with the construction loan at the same time we closed on buying the land. So it didn’t require us to get a land loan.” Intracorp’s lenders require the developer to pre-sell the project before finalizing a loan. So anywhere from 40 percent to 50 percent of the project must be sold or held in reservation. Intergulf has a lot of in-house equity and uses loans and financing for its projects, Werner says. About 75 percent to 85 percent of the project cost is financed. The land is purchased with a loan and then paid off when construction financing comes through.

Since many of the buyers Downtown are first timers, developers have created first-time buyer programs. To reserve a unit, buyers are required to put down a $5,000 refundable deposit. To open escrow, first-time buyers only have to put down 5 percent; all other buyers put down 10 percent. However, in response to the market, Intracorp now has a 3 percent down program. The escrow routine for homebuyers depends on the stage of the project. Residents already are moving into 235 Market and available units are going straight to contract with a 30-day escrow. The sales office expected 48 of the 57 units to be closed by the end of September. If a project has all its approvals, “we are usually in a position to go from reservations to contracts, probably six months into the construction process,” Fernandez says. For every project, Intracorp adjusts in anticipation of one third of its buyers pulling out. “That’s part of the business,” Fernandez says. “Once you go from reservation to contract, people will cancel.” That’s part of the reason they do mid-rise projects. He says a 16-month vs. 24-month building timeline means people are less apt to cancel.

Each developer has more plans on the drawing board and a great tomorrow is anticipated. “There might be the ol’ hiccup along the way,” Bosa says. “But San Diego hasn’t seen anything yet. It’s because people have all of a sudden discovered Downtown. And it’s just beginning here. It’s going to get better and better and better.”