Daily Business Report-Oct. 13, 2014
Rendering of the project looking southwest from the San Diego River.
New Plan for U-T Property
U-T San Diego Publisher “Papa” Doug Manchester is moving forward with plans to build a luxury multi-family housing development on the U-T property in Mission Valley, but earlier plans to include an office tower have been scrapped. The current plan is to build a mid-rise residential building with 200 units on the northern portion of what is now a parking lot facing the San Diego River, said Perry Dealy, Manchester Financial Group’s consulting development manager, at the Oct. 1 meeting of the Mission Valley Planning Group.
Manchester’s plans to redevelop the 12.9-acre site were first announced in 2012. The original proposal, described in a U-T San Diego article, included a 22-story tower with 198 residential units, a 10-story office building with 234,415 square feet of space, a parking garage and a lighthouse structure, for a total cost of $200 million.
Manchester decided to scrap plans for an office tower because more than a year of pre-leasing yielded little interest in commercial office space, Dealy said.
With the office tower and associated parking structure off the table, architect Doug Austin of AVRP Studios expanded the footprint and reduced the height of the residential building while maintaining the same residential density. The residential building in the current plan steps down from seven stories on the south end to two stories on the north end. Residential parking is included on the first two levels of the building.
In addition to better fitting with the scale of the surrounding area, the removal of the project’s office tower component reduced the traffic impact by 75 to 80 percent, because office projects generate much more traffic than residential buildings, especially at peak hours, Dealy said.
The project now includes 1,008 parking spaces, which is 24 more than the city requires, Austin said.
The current plan still includes a 0.8-acre public park along the river. The park, which has already been approved by the board of the San Diego River Conservancy and the city’s Park and Recreation Board, includes walking trails, bike racks, artwork, amenities for dogs and space for concessions. Dealy said he believes it will be the first park to be permitted along the river since the city amended the zoning laws in Mission Valley to reflect the San Diego River Park Master Plan.
The city’s Development Services Department must now review the project application. It will eventually return to the Mission Valley Planning Group for review of the design and a recommendation to the Planning Commission.
The U-T project is just one of many that have been proposed lately in that part Mission Valley. Just west of the U-T project, Atlas Hotels, Inc. has entered a joint venture with Lowe Enterprises and AECOM Capital to redevelop the Town and Country Resort and Convention Center. East of the U-T on Camino de la Reina across state Route 163, the Dinerstein Cos. has proposed a multi-family residential project on the site of a car and boat dealership.
— Mission Valley News
Southland Home Sales Edge Higher
— Price Growth Slows —
Southern California home sales hit a five-year high for a September, rising slightly above a year earlier for the first time in 12 months amid gains for mid- to high-end deals. The median sale price fell below an 80-month high reached in August and for the first time in more than two years none of the Southland counties posted a double-digit year-over-year price gain, CoreLogic DataQuick reported.
A total of 19,348 new and resale houses and condos sold in Los Angeles, Riverside, San Diego, Ventura, San Bernardino and Orange counties last month. That was up 2.9 percent from 18,796 sales in August, and up 1.2 percent from 19,112 sales in September 2013, according to CoreLogic DataQuick data.
On average, sales have fallen 9.4 percent between August and September since 1988, when CoreLogic DataQuick statistics begin. Last month marked the first time sales have risen on a year-over-year basis since September last year, when sales rose 7.0 percent from September 2012.
September home sales have ranged from a low of 12,455 in 2007 to a high of 37,771 in 2003. Last month’s sales were 18.3 percent below the September average of 23,695 sales.
The median price paid for all new and resale houses and condos sold in the six-county region last month was $413,000, down 1.7 percent from $420,000 in August and up 8.1 percent from $382,000 in September 2013. The August 2014 median was the highest for any month since December 2007, when it was $425,000.
The median’s 8.1 percent year-over-year gain in September marked the fourth consecutive month with a single-digit annual increase following 22 straight months of double-digit gains of as much as 28.3 percent.
“Price appreciation has dipped into single-digit territory as more would-be buyers get priced out, investors back off and incomes rise modestly at best. Yet there are still upward forces on home prices: Jobs are being created and families started at a time when the supply of existing homes for sale, as well as the number of new homes being built, remains relatively low. The good news for those looking to buy a home now is that mortgage rates remain very low in an historical context, and we’re past the peak home-buying season. Today’s home shoppers are more likely to find a less-crowded market with fewer intense multiple-offer situations and more serious, realistic sellers,” said Andrew LePage, an analyst with Irvine-based CoreLogic DataQuick.
Last month was the first since June 2012 in which none of the six Southland counties posted a double-digit, year-over-year gain in their median sale prices (all had single-digit increases). Orange County’s $585,000 September median was the closest – within 9.3 percent – to its all-time peak of $645,000 in June 2007.
For the Southland overall the September median stood 18.2 percent below the peak $505,000 median in spring/summer 2007.
Home prices have been rising at different rates depending on price segment. In September, the lowest-cost third of the region’s housing stock saw a 10.9 percent year-over-year increase in the median price paid per square foot for resale houses. The annual gain was 6.6 percent for the middle third of the market and 4.5 percent for the top, most-expensive third.
The number of homes that sold for $500,000 or more last month rose 9.0 percent compared with a year earlier. But sales below $500,000 fell 6.7 percent year-over-year. Sales below $200,000 dropped 24.7 percent. Sales in the lower price ranges are hampered by, among other things, the drop in affordability over the last year, a fussy mortgage market and a relatively low inventory of homes for sale.
In September, 36.7 percent of all Southland home sales were for $500,000 or more, down from 38.5 percent in August – an 81-month high – and up from 33.2 percent in September 2013.
Distressed property sales continued to play a lesser role in the market.
Foreclosure resales – homes foreclosed on in the prior 12 months – represented 4.7 percent of the Southland resale market last month. That was down from a revised 5.0 percent the prior month and down from 6.4 percent a year earlier. In recent months the foreclosure resale rate has been the lowest since early 2007. In the current cycle, foreclosure resales hit a high of 56.7 percent in February 2009.
Short sales – transactions where the sale price fell short of what was owed on the property – made up an estimated 6.0 percent of Southland resales last month. That was up insignificantly from 5.9 percent the prior month and down from 10.9 percent a year earlier.
Absentee buyers – mostly investors and some second-home purchasers – bought 23.3 percent of the Southland homes sold last month. That was the lowest absentee share since October 2010, when 22.1 percent of homes sold to absentee buyers. Last month’s figure was down from 23.8 percent the prior month and down from 27.0 percent a year earlier. The peak was 32.4 percent in January 2013, while the monthly average since 2000, when the CoreLogic DataQuick absentee data begin, is about 19 percent.
Buyers paying cash accounted for 24.3 percent of September home sales, down from a revised 24.5 percent in August and down from 28.7 percent in September last year. Last month’s figure was the lowest since June 2010, when 24.2 percent of Southland homes were bought with cash. The peak was 36.9 percent in February 2013, and since 1988 the monthly average is 16.7 percent.
South Park Group Seeks to Block
Target From Neighborhood
A plan by the owners of a local grocery store to lease the building to Target has sparked a dispute in San Diego’s South Park neighborhood, and a group opposed to locating the chain store there is circulating a petition to keep it out.
Gala Foods put its location on the market in December. Part-owner Saad Hirmez said Target was selected because the company’s mini-store, TargetExpress, would fit the community. He said the store will include fresh produce, a pharmacy and other essentials.
“It’s a new concept that Target is unveiling, and we felt — well, they felt — that this fits their demographics and would be a great location, and we agreed with them,” Hirmez said. “And therefore, that’s why we entered into a lease with them.”
Located a few blocks away, Joe Grant of Grant’s Marketplace doesn’t feel the same way. “I prefer, I strongly prefer, our community keeps its character of locally owned businesses,” he said. “So I’m opposed to a great big market like Target moving into the neighborhood.”
Some San Diegans in the area shared Grant’s feelings and created the group Save South Park SD to spread their message. Grant is not a part of the group, which began circulating a petition this month calling on City Council President Todd Gloria to keep big box stores out of the neighborhood.
Gloria represents the area, but a spokeswoman from his office said the decision would likely be out of the councilman’s hands.
A member of Save South Park did not want to speak publicly until it had chosen a spokesperson.
Hirmez said Target’s lease begins Nov. 1, and the store is expected to open in July.
USD to Host ‘Reverse Innovation’ Speaker
An expert on “reverse innovation,” where goods are first developed and marketed to emerging nations before being sold in the West, will speak at the University of San Diego on Oct. 16, sponsored by the university’s Ahlers Center for International Business.
Vijay Govindarajan is a professor at the Tuck School of Business at Dartmouth and a best-selling author. He will look at how companies like General Electric and PepsiCo are unlocking a world of business opportunity by capitalizing on this phenomenon instead of simply exporting products. His discussion will highlight why reverse innovation is beneficial to American corporations, why it is difficult, and who will ultimately benefit from the change.
Navy Commissions USS America
The Navy commissioned its newest amphibious assault ship, USS America, in an official ceremony in San Francisco Saturday. Secretary of the Navy Ray Mabus delivered the commission ceremony’s principal address while Lynne Pace, wife of former chairman of the Joint Chiefs of Staff, Peter Pace, served as the ship’s sponsor. Pace gave the traditional order to “man our ship and bring her to life.”
USS America will call San Diego home. It is the first ship of its class, replacing the Tarawa class of amphibious assault ships. The new class will be capable of supporting current and future aircraft such as the tilt-rotor MV-22 Osprey and F-35B Lightning II. This class of ships, including USS America and the future USS Tripoli, will not include a well deck.
The ship’s commanding officer is Captain Robert A. Hall Jr., who will lead a crew of 1,200 sailors and nearly 1,900 Marines.
USS America is the fourth U.S. Navy ship to bear this name.
— Times of San Diego
Special Districts Association’s
San Diego Chapter is Honored
The San Diego County Chapter of the California Special Districts Association (CSDA) has received the Chapter of the Year award for 2014. The award was presented by the association at its annual Conference and Exhibitor Showcase. The San Diego chapter currently has 44 members and advocates for education, good governance for members, and promotes public outreach about special districts. Kathleen Hedberg, chapter president and board director of the Helix Water District, accepted the award on behalf of the chapter.
The award was presented in recognition of the chapter’s Educational Outreach Grant program where teachers receive grants that fund projects leading to a better understanding of the role special districts play in local communities. For the 2013/14 school year, 13 grant recipients received over $8,000 in grants
Five Educators Honored as Teachers of the Year
Five local educators were named San Diego County Teachers of the Year during the “Cox Presents: A Salute to Teachers” presented by Ashford University in partnership with the San Diego County Office of Education. The annual event honored San Diego County’s public school teachers and was televised live on Channel 4 San Diego from the Balboa Theatre in Downtown San Diego.
The Teachers of the Year are:
• John Berray, West Hills High School (Grossmont Union High School District).
• Mary Goins, Lakeside Middle School (Lakeside Union School District).
• Sara Matthews, Sarah Anthony School (San Diego County Office of Education).
• Khamphet Pease, Wilson Middle School (San Diego Unified School District).
• Maria Teran-Cruz, Jefferson Elementary School (Carlsbad Unified School District).
There were a total of 42 teachers nominated for 2014-15 County Teacher of the Year honors out of 26,000 current teachers in the region. Finalists were selected based on student achievement, teaching philosophy, familiarity with current issues in education and community involvement.
The five teachers of the year will represent San Diego County in the California Teacher of the Year program. The state winner will be announced later this year.
Hub International Elevates Mike Barone
Hub International Limited, a global insurance brokerage, has named Mike Barone president of the company’s National Employee Benefits Practice.
Barone is charged with leading Hub’s investments in the practice, including strategic benefits planning, population health management, employee engagement and communication, health care reform guidance and compliance, as well as ongoing client exchange technology solutions. He works out of Hub International’s San Diego offices at 5375 Mira Sorrento Place. Barone will continue to oversee all Intercare San Diego and Orange County operations.
Barone joined Hub in 2012 via the acquisition of Intercare, an employee benefits consultancy and brokerage. He was subsequently appointed president of Hub International’s San Diego operations.