To all you downtown San Diego condo owners, you can relax just a bit longer. It turns out the Bosa Development won’t be breaking ground on the new Santa Fe Depot Parcel #9 building quite yet. From what I’ve learned, Parcel #9 is too high-end of a building to build right now – in other words, no one will pay what Bosa wants/needs to sell the condos for when they’re done. Rumor has it that Bosa plans on selling the new tower for an average of $1000/sqft, which is the very top end of our market right now.
So what now? The way I see it, there are few options…
A) Build a cheaper building. If Bosa scales back on some of the finishes/amenities, perhaps he can price the building low enough to appeal to home buyers – maybe in the $800/sqft range? Last year, Bayside (the newest tower) sold 22 units on the MLS and had a $609/sqft average sales price. If you add 10% appreciation per year for three years, you’d have an average of $810/sqft. I personally don’t think we’ll see 10% growth per year, for the next three years, but it’s possible – I’m guessing we’ll see about 5-10%/yr, with about a 6 month halt once interest rates hit 5%. However, I do think that the pent-up demand and newness of the building would boost prices beyond where the rest of the market is.
B) Build another building. Bosa owns several lots in downtown San Diego. One option may be to build a less expensive building, which can then be sold at lower prices. Luckily, the do have plans for their Kettner and Ash building, but the problem is that it’s not fully approved by the City. And from what I hear, it may take 1-2 years to get full approval…and don’t forget it takes another 2-3 years to build the place!
C) Just go for it! Nat Bosa can roll the dice and just proceed with Parcel 9 as planned and hope the demand is there. As I mentioned, this will be a very high-end building and will have very little, if any competition so….maybe he’ll get his price? I think it’s still pretty ambitious, but who knows what will change in the next 3-4 years.
So for now, we’ll have to wait and see what happens. If you’d like be notified as soon as I know what’s happening, please click here. For any San Diego real estate questions, please contact Denny Oh at 858-243-2092 or [email protected]. Thanks.