Western Pacific Acquires Two Buildings, Plans Conversions

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SAN DIEGO-Count Western Pacific Housing Inc. among those developers who maintain a bullish attitude towards the county’s housing market. The residential developer recently picked up two buildings and a third site for $14.9 million and has the properties earmarked for condo conversions.Although the deals were marked as separate transactions, the sites are adjacent and part of Western Pacific’s plans to add 145 condo units to the market. The firm will begin construction on the project during the first quarter of 2006.In the first deal, the firm acquired the 47,250-sf American Red Cross site located at 3650-80 Fifth Ave. The property sold for $10.5 million. Tim Mills of Burnham Real Estate-Oncor International represented the buyer. Chuck Wasker of GVA IPC represented the seller, American Red Cross.In the second deal, Western Pacific picked up the 13,500-sf American Heart Association property located at 3640 Fifth Ave. That property sold for $3 million. Burnham’s Mills represented the buyer. Craig Irving of Irving Hughes represented the seller, the American Heart Association.In the final transaction, Western Pacific acquired an adjacent 6,747-sf parcel of land located at 4689 Fourth Ave. The lot sold for nearly $1.5 million. Burnham’s Mills represented the buyer. Wasker represented the seller, Michael and Cheryl O’Donnell. While these three properties flipped, the multifamily market in general is slowing down, according to a recent report released by Burnham. Quarterly sales this year have been less than 4,000 units (totaling 10,619 units in 762 deals year to date) for the first time since 1996, when 528 properties totaling 10,271 units traded during the first nine months of the year. In the third-quarter alone, 253 transactions, encompassing 3,077 units, closed, down 32% from the 373 deals that closed and 57.6% less than the 7,261 units that changed hands during the same time a year ago.”Three consecutive quarters of declining transaction activity clearly points to a ‘cooling off’ period in which the market is undergoing a correction for sales prices that exceed a reasonable relationship to property income,” says Burnham vice president and apartment specialist George Carlson. However, Carlson points to condo conversions as a driving force for price inequities in the market. “The imbalance of pricing not justified by income has been driven in large part by the wave of condo conversions,” Carlson says. “There is a substantial premium for properties that are candidates or are already mapped for conversion, and this has put strong upward pressure on prices in general.”