Thursday, Aug. 10, 2006 | When Jesus Garcia moved to San Diego from Texas for a temporary employment contract with shipbuilder Nassco, he didn’t expect to stay long. He moved into the 12-story BayView Suites hotel in National City to be near the shipyard.
Two and a half years later, Nassco hasn’t laid him off, so Garcia’s still around. He’s made the hotel his home, for now.
But the hotel won’t be a residence for temporary passersby much longer.
The 172-unit BayView Suites hotel will soon be called the BayView Tower, becoming the latest brand of condominiums to hit a housing market that has seen a bounty of apartment units converted to condos in recent years.
Still a functioning hotel, the building features a big red-and-white banner hanging from the top, broadcasting “CONDOS FROM $185,000” to passers-by in National City and on nearby Interstate 5.
“This is a unique product,” said Dan Fissori, director of planning and development for Pacifica Companies, the project’s developers. “The prices are incomparable.”
The sales team for the project, Vertical Properties, reports “hundreds and hundreds” of people who’ve signed up on their interest list, many of whom have pre-qualified for financing to purchase one of the units.
Construction has yet to begin on the bulk of the renovations planned for the BayView Tower, the new name for the development. Only the renovations on the sales offices and two condo “model” suites have started. The one- and two-bedroom condos are planned to be between 500 and 1,000 square feet, Pacifica said. Sales representatives estimate that construction on the rest of the project will commence in the early fall.
And Pacifica plans to build another condo tower across the street, on the same lot with the Pacifica-owned Holiday Inn.
“We really think that there’s an opportunity to create a whole new market,” Fissori said.
The hotel, which sits between 8th and 9th Avenues on National City Boulevard, was built in 1992. Because of its location, the hotel rents most of its rooms to military personnel or temporary workers on the Nassco shipyard.
Some of those hotel guests have been living at the hotel for months, even years. They say there’s quite a bit of work to be done before the suites could attract buyers. Garcia said the hotel-condo conversion concept would never work where he’s from, in Texas.
“The only thing is, it’s kind of small,” he said of the rooms. “One hundred thousand dollars gets you a big house in Texas.”
But the “from $185,000” is perhaps the most attractive part of the project to buyers. And the developers at Pacifica know it.
“It was a booming real estate market,” Fissori said of the time when the project began in 2003. “The hotel lent itself to [conversion] because it’s all suites.”
Pacifica wasn’t alone in its efforts to use an existing property to jump into a red-hot housing market. Scores of apartment buildings across the county were remodeled and renovated to be sold as condos in the red-hot day of the housing market. And so a mid-rise building with views of the Coronado Bridge and San Diego Bay like the BayView Suites building became a prime candidate for a condo conversion.
Peter Dennehy, senior vice president for Sullivan Group Real Estate Advisors, said it’s been fairly rare in San Diego to convert a commercial-use building for residential use, though cities like Los Angeles have converted several office buildings to condos recently.
The units are being prepped just as the condo market is getting shaky. As of the end of June, there were more than 3,000 unsold condos in San Diego County. The price of the average condo has dropped about $20,000 in the last year, and recently converted condos have flooded the market. Some condo conversion projects are now being reverted back into apartments.
Dennehy said timing of the release of the BayView Tower units will be critical for Pacifica. “Is the market in general glutting? Sure,” he said. “But it’s not that there aren’t still condos selling.”
Dennehy expects the project to do well in National City because most conversion projects don’t offer much “lifestyle appeal” because they are merely old apartment buildings with a facelift.
“There are mid-rise views, freeway access, I think the trolley runs right through there,” he said. “It’s not your standard garden project in El Cajon with carport parking.”
He said gutting and renovating the units instead of just revamping old structures will probably mean the units will be better quality than typical condo conversions.
Fissori said the hotel was due for a “serious remodel” when the project idea first came up. Because the BayView Suites generally books rooms in blocks for Nassco or the National Guard and doesn’t market to many new customers, Pacifica would have invested a lot of capital into the renovation, with a “negligible return,” Fissori said.
And so Pacifica put together a proposal for the project and presented it to the National City Planning Commission.
“When we first proposed this to the city, it took a little bit of convincing,” Fissori said. The planning committee members were reluctant to lose the taxes that were generated by the hotel, he said.
He said the city started to warm up to the project because it’s within the city’s downtown redevelopment area.
“When those units sell and resell over the years, that’s property revenue that will go to the city,” Fissori said. “That will start attracting retail, and so on. They saw the vision and they saw what it could lead to.”
Concurrent with the BayView Suites/Tower project is a plan to redevelop the property across the street, a Holiday Inn also owned by Pacifica. That plan includes another condo tower and townhomes. Fissori said Pacifica will likely watch the BayView project very closely in order to predict how successful its future redevelopments might be.
Fissori expects the project will attract young professionals, retirees, empty-nesters and “never-nesters” – first-time homebuyers.
Tony Garcia, acting building director for National City, said he thinks the development will be good for the area. He said this conversion and the other condo projects planned for downtown National City will make it a lot like the Gaslamp district in downtown San Diego.
“It’ll be a great place to live,” he said. “A vibrant street life, cute cafes, pizzerias.”
Real estate advisor Gary London said National City Boulevard is going to “redevelop with gusto” and the project will be right in the heart of that.
Plus, “sometimes price is the ultimate amenity,” he said of the project.
The units will be fully furnished – that means new beds, new sofas and flatscreen TVs, Fissori said.
That’s the only way someone like Patrick Torres would consider buying one of these units. Originally from Los Angeles, Torres has been living on the 11th floor of the hotel for about a month. He thinks the conversion is a good idea, but said there’s quite a bit of fixing-up to do.
Indeed, a recent trip to the hotel revealed a unit without a door handle, several elevator call buttons missing, a lingering Kahlua bottle and a seventh-floor guard rail wrapped in yellow caution tape and a sign that reads: PLEASE DO NOT LEAN.
“They’d need to fix up the interior real good,” he said. “And maybe clean up the area, too. Get some good people living here.”