SAN DIEGO—Most luxury apartments in the San Diego market have been developed Downtown or in further-out suburban locations near freeway access, which can inhibit those communities from creating a sense of place, JLL Income Property Trust's president and CEO Allan Swaringen and managing director and portfolio manager Brian Kuzniar tell GlobeSt.com. The REIT recently purchased Dylan Point Loma here, a newly developed, ultra-luxury, 180-unit coastal apartment community that is within walking distance from the Pacific Ocean, for approximately $90 million from what Real Capital Analytics reports was Monarch Group. No other new apartments have been developed in this market within the last 30 years. We spoke exclusively with Swaringen and Kuzniar about the purchase and the luxury-apartment market in San Diego.
GlobeSt.com: Why was this particular property of interest to your firm?
Swaringen and Kuzniar: JLL Income Property Trust is principally a longer term investor, trying to identify higher-quality properties in strong markets that have significant embedded barriers to entry. We believe that is a sound approach to achieve long-term core-like returns for investors. The design, quality of construction, tenant amenities and unique coastal location for Dylan Point Loma fit this strategy perfectly.
GlobeSt.com: What do you look for in luxury-apartment acquisitions?
Swaringen and Kuzniar: While Dylan Point Loma clearly qualifies at the luxury-end of the apartment market in San Diego—and it is deserving of that august designation due to its construction quality, gated community feel and near-resort-quality tenant amenities, its proximity to the ocean—along with the numerous other local San Diego entertainment and restaurant destinations—puts it in a class all its own in terms of anything that's been built in the Point Loma area for nearly 30 years. While we are core investors in the apartment sector on a national basis, getting into the luxury end for us was an added benefit in Dylan Point Loma.
GlobeSt.com: How would you characterize the luxury-apartment market in San Diego?
Swaringen and Kuzniar: Most of the luxury apartments in the San Diego area have been developed either in the Downtown, Little Italy area or in further out suburban locations in close proximity to San Diego's web of high-traffic expressways that make them convenient for getting in and around San Diego, but in some ways inhibits those communities from creating the sense of place that has been achieved at Dylan Point Loma. Principally, being west of the 5 makes our location very unique in the San Diego apartment market.
GlobeSt.com: What else should our readers know about luxury-apartment acquisitions?
Swaringen and Kuzniar: “Luxury” apartments are not solely defined by the quality of their construction; rather, they must offer residents a unique way of life and level of service tailored to their desired lifestyle. Amenity-rich and catering to the outdoor coastal enthusiast, yet convenient to the city center, Dylan Point Loma speaks strongly to the local demographic demands of the San Diego coastline. San Diego's infill opportunities rarely include coastal locations beyond the central-city area, and Dylan Point Loma is such an opportunity to capture this dynamic location.
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Carrie Rossenfeld
Carrie Rossenfeld is a reporter for the San Diego and Orange County markets on GlobeSt.com and a contributor to Real Estate Forum. She was a trade-magazine and newsletter editor in New York City before moving to Southern California to become a freelance writer and editor for magazines, books and websites. Rossenfeld has written extensively on topics including commercial real estate, running a medical practice, intellectual-property licensing and giftware. She has edited books about profiting from real estate and has ghostwritten a book about starting a home-based business.
