Reported by Lola Sherman of the Union Tribune
Major projects dot downtown Oceanside
Some might consider Hamid Nikkho an optimist. With the possibility of a serious downturn in the economy, Nikkho is building landmark projects in downtown Oceanside.
He’s not alone.
Nikkho and his partners are working on two multimillion-dollar developments downtown. The developments would add more than 420 residences, 330 hotel rooms and 270 time-share units in an area stretching from the historic pier to Interstate 5. The most expensive condominiums – top-floor units with stunning ocean views – are priced just shy of $2 million, an unheard-of price for the area.
If those projects and a handful of others come to fruition and prosper, they will realize a vision dating to 1975, when the city established a redevelopment district designed to change downtown Oceanside from a Marine Corps playground to a Mecca for well-heeled residents and tourists.
So far, sales show mixed results. Sales of luxury time-share units have been brisk. At the condominium complexes, the penthouses aren’t moving and interest in the lower-priced units is sluggish. Still, the scene is changing. Projects besides Nikkho’s OceanLofts and The Belvedere are Wyndham time shares, Oceanside Terraces, Ocean Village, a Westin hotel and a five-block complex proposed by CityMark developers.
OceanLofts is finished, the Wyndham nearly so and the Terraces and Ocean Village not far behind. The hotel, CityMark and The Belvedere are winding through the approval process at City Hall. Two years ago, most of the projects were nothing but poured concrete or architectural drawings.
A challenging market
Buyers this year quickly snapped up five lofts in Nikkho’s 32-unit OceanLofts, a renovated five-story telephone-switching office on Seagaze Drive. The five units are on lower floors, with price tags from $400,000 to $600,000.
Nikkho doesn’t have a buyer for the $2 million penthouse, but said philosophically, “I believe someone should fall in love with it to spend that much money.” He is sure “things will turn around after the first of the year.”
Nikkho’s optimism is not shared by economists and real estate professionals. A recent study by Chapman University in Orange County predicted an 8.2 percent drop in real estate prices by the end of 2008.
“Good luck” was real estate broker Paula Barksdale’s word to owners of developments entering the slow market. Buyers are watching for prices to drop, and owners are hoping for an upturn, said Barksdale, who handles downtown Oceanside properties.
John Kocmur, president of Janez Corp., developer of Oceanside Terraces at Mission Avenue and Cleveland Street, agreed that would-be buyers are hesitating. Construction is wrapping up at his complex. Kocmur said his mix of commercial and condominium space has two strengths: close proximity to the beach and an opening that coincides with a buzz about downtown. Kocmur said marketing began midyear for the six-story complex that has retail and office space on the first two floors. Condo prices range from $700,000 to $1.8 million.
Three condos – on the third and fourth floors – are in escrow, Kocmur said. “Traffic-wise, it’s doing OK,” Kocmur said. “We’re getting 40 to 50 people looking per week.”
The surprise, he added, has been the interest in the retail and office space. All of the retail space and seven of 10 offices are in the process of being sold. Escrow is due to close after the city issues a certificate of occupancy in January, Janez representative JoClaire Sullivan said. Retail space is priced at $340 to $350 per square foot, and office space is $400 to $450, Sullivan said.
Last year, area retail space was selling for about $200 per square foot, Barksdale said.
A single investor is buying the retail space, of which half of its leases have been signed, Kocmur said. A sushi restaurant, juice bar and a women’s clothing shop will move in.
Another project nearing completion is Ocean Village, a multicolored set of 28 two-story townhomes and five penthouses with 10,000 square feet of retail on the ground floor at Coast Highway and Pier View Way. Ayoub Sesar, the project’s Irvine-based architect, said he hopes restaurants, shops and a gallery will fill the retail space. Marketing will start after construction is done in January, said Sesar’s assistant, Pei Lin. Condos will be offered for between $700,000 and $1 million, she said.
Although those prices might seem high in a down economy, Barksdale said she sold a downtown row house recently for $1.3 million. New row houses in the mid-1990s sold for $300,000, Barksdale said.
At the Wyndham Vacation Ownership time share, sales reportedly have been brisk. Although the City Council was told at a VIP tour last month that all 128 units were sold between March and October, Wyndham officials say units at the beachfront property are available.
Time-share flexibility
Wyndham uses a time-share points system in which customers buy points to use at any company property. “You use them like currency,” said Lisa Burby, vice president for corporate communications at the Florida-based company.
Translating the points into prices, $25,000 to $35,000 will buy a prime-time week at a two-bedroom unit. About $60,000 will buy a week in the Presidential Suite. Wyndham is the largest time-share company in the world, with resorts in North America, the Caribbean and the South Pacific. Three are in California, including the Wyndham Harbour in San Diego. The company also owns 15 WorldMark time shares in California, including one at the Oceanside Harbor.
Until the Westin hotel is built, the Wyndham will offer 32 hotel rooms at prices ranging from $149 to $399 per night. The first guests are scheduled to arrive Friday, with a grand opening early next year.
Three in early stages
The three big downtown projects still on the drawing boards are CityMark, the Westin hotel and The Belvedere.
The biggest project is proposed by San Diego-based CityMark on five blocks near the beach, between Seagaze and Civic Center drives. The project proposes 231 condominiums and 48,500 feet of retail space in two four-story and three seven-story structures.
The 289-room Westin hotel, being built by S.D. Malkin Properties Inc. of San Diego, is part of a $187 million development planned for two city-owned blocks next to the CityMark project. In addition to the Westin, there will be a 47-room hotel, 48 time shares, restaurants and shops. The city is contributing $27 million to the project. Malkin Vice President Jeremy Cohen said a goal to open by spring 2010 is not firm.
The Belvedere is a seven-story complex of lofts, condominiums and retail space at Mission Avenue and Horne Street. Nikkho said he expects to break ground in May but has scaled back the retail space from 24,000 to 8,000 square feet. There was not a market for that much retail space, he said.
Despite the uncertain real estate climate, developers say they are banking on the inevitable lure of living just steps from the beach.
On a recent visit from Wyndham’s Orlando headquarters, Chief Executive Franz Hanning stood on the balcony of a time-share unit and gazed at the dazzling Pacific surf.
“There’s nothing like this left in California,” he said.
Jill Heers reports that Oceanside is still much lower priced than its coastal neighbors in Orange County and in Carlsbad or Encinitas with an entry level condo starting at $300,000 on average and a 4 bedroom home starting at $500,000
