Barratt American, the Carlsbad-based U.S. headquarters of Britain’s Barratt Development, has committed $40 million to buy four properties that will serve as the foundation for an urban development division seeking projects in San Diego, Orange and Riverside counties’ markets.

The new division is working out of Barratt’s headquarters, but may relocate to Downtown San Diego where the urban market is fast and furious.

Barratt’s first effort is a $120 million conversion of an old La Jolla motel into 138 luxury condos that broke ground in late May. The Seahaus La Jolla effort, in partnership with CLB Partners, is not without controversy; some locals have used it to mount a recall campaign against the district’s city councilman, Scott Peters.

Next up is a project on J Street in East Village, a block from Petco Park, where the old Rescue Mission will be demolished. In partnership with BCG International, the eight-story, full-block project will break ground in January and is slated for 170 condos, deemed affordable by virtue of their $250,000 starting price. Completion is expected in spring 2005.

Barratt also is working on plans for a 58-unit project in downtown La Mesa that just received planning commission approval and 200 units near City Hall in Escondido.

“It is more than a leap of faith,” says Mick Pattinson, president of Barratt American. “We believe the time has come for us to get into urban development. We are very experienced with this in other parts of the world, but here in Southern California we have been more experienced in suburban development.”

Barratt will continue to be a suburban builder, but Pattinson says it is getting harder, with greater competition for a commodity — land — that is increasingly expensive to obtain. “While I don’t think we are going to stop seeing the rural land development, I think we are going to see the pace slow and the cost increase,” Pattinson says.

Pattinson is confident the urban product will sell. The politicians, however, still can be reluctant to give their blessings.

“As to the city councils, in some instances we are going to get good support, in other instances it will take them time to come around,” he says.

Pattinson, who has been with Barratt since 1976, says San Diego’s CCDC is an urban development agency that should be replicated in cities large and small. “(Those cities) should all be stimulating their urban core and helping to solve the housing crisis,” he says.

A good argument against much urban redevelopment is that the existing infrastructure — parks, roads, etc. — already is under strain. Pattinson turns that around, noting that at least the infrastructure exists.

“It may be we need to upgrade the existing infrastructure,” he says. “‘Fair enough,’ I say, as long as the home owner is not being gouged. It is cheaper to build a park, fix a road or build a police station than to go out in the suburbs and build this all 100 percent.”

Since 1958, Barratt has built more than 200,000 homes worldwide, mostly in the United States and Britain. For the Southern California effort, the company will lean on its British experience, where 75 percent of the houses it creates are in urban environments.

“We are looking forward to getting this thing under way,” Pattinson says. “It is dynamic and the market is crying for it. It is good planning, quite frankly.”

— Tim McClain