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Thursday, April 3, 2008 | The name is scripted on signs in fenced-off construction sites along Ocean Front Walk in Mission Beach, and is on the lips of chitchatting neighbors: Ocean Pacific. It’s the developer dramatically changing this stretch of San Diego waterfront, scraping rundown houses to the ground and erecting steel-and-glass, architecturally remarkable structures in their place.
The scuttlebutt at the beach swirls, neighbors marveling at the millions of dollars Ocean Pacific commands for its condos and houses, and residents angling for an invitation to a party in one of the units, which feature curved lines and steel accents, retractable windows and top-of-the-line accoutrements.
With San Diego’s voracious appetite for real estate development, it seemed just a matter of time before Mission Beach, a once ramshackle community of summer cottages, would metamorphose into gleaming waterfront condos. But that the transformation continues in these market conditions has fascinated Mission Beach. And it’s one of the most dramatic transformations to hit coastal San Diego County in decades.
Ken Cornell and his wife, Beth Molasky-Cornell, own Ocean Pacific Companies. They pick up parcel after parcel, demolish or completely renovate what was there, and pour hundreds of thousands of dollars into the structure and top-of-the-line furnishings. Then they wait, sometimes for months in conditions like these, for a well-heeled buyer to come along to live or vacation in one of the glass- and steel-covered condos and houses, barely flinching at prices in the millions of dollars. They sell for prices per square foot that are more than double the prices for top units in downtown San Diego.
In Mission Beach, Cornell has built about 20 projects in the last five years, totaling 70 or 80 condos and a few single-family houses, he estimated. They have about eight or 10 more projects planned, mostly along Ocean Front Walk. About 20 of his condos are on the market, comprising half of the inventory of oceanfront Mission Beach homes for sale. That stock of for-sale homes has doubled over the year as the market’s grown tough, he said.
And from the neighbors, there doesn’t seem to be much opposition, just bewilderment.
“I think that some people were a little bit surprised, because it’s so contemporary, it’s so different,” said Nancie Geller, past president of the Mission Beach Town Council. “It’s not the typical beach cottage. They were blown away by all of the metals. Some of us who live at the beach were saying, ‘Hmm, wonder how long those’ll take before they rust.’”
And the mystique incubates when Cornell puts tarps over projects that are under construction. He says it’s to keep debris from getting on the beach, and to keep his workers from ogling sunbathers and losing productivity.
But he admits the move helps to pique Mission Beach’s curiosity about what he’s doing.
“I’m from Vegas,” he said. “The curtain doesn’t go up until the show’s ready to go on.”
But though beach town neighbors wouldn’t be beach town neighbors without a generous amount of gossip and skepticism of change, it was hard to find anyone in Mission Beach who opposed the Ocean Pacific developments.
“They used to be three little livable one or two bedroom places — they were fishermen, or out collecting shells,” said Pat Gallagher, a longtime Mission Beach resident who moved away a few years ago, but lived down the street when Cornell began his first project. “They’re doing whatever they do at the beach. They’re not sitting with their feet up sipping martinis. It’s quite a departure.”
That’s different from La Jolla, where Cornell first dabbled in development when he arrived in San Diego.
In La Jolla, “the neighbors weren’t as friendly,” Cornell said. “They were vehemently opposed to any change in their neighborhood.”
Many observers of the change in Mission Beach said they weren’t surprised the neighbors have kept mum about any frustrations they have with the development. By magnetizing the super-rich to Mission Beach, Ocean Pacific has affected a shift in the buyer pool for the general community.
And nearby houses and complexes have hitched their values to the Ocean Pacific star, which shows no signs of falling soon.
“When it comes to tearing down the cottages, nobody cares,” said former city planning commissioner Carolyn Chase. “They’re not historic. … In California, we’d rather build wealth than keep charm.”
The Cornells keep buying up oceanfront parcels as soon as they become available, even as a slow economy tempers the second-home-buying fever that met his first projects.
“The market’s definitely having an effect,” he said. “But the time to do things is the time when everyone’s saying not to do it.”
The projects haven’t met any historic-preservation obstacles in being approved by the California Coastal Commission, said Laurinda Owens, a local coastal planner with the commission.
But the question of preservation attempts to balance the historic feel of a community with the natural evolution of a community. And that’s been one of the commission’s biggest challenges, Owen said. They’re trying to protect coastal views while allowing the community to evolve. If interpreted too harshly, “it could mean nothing would ever change,” she said.
Sitting behind his glass desk in his Garnet Avenue office on Wednesday afternoon, Cornell gazed at an aerial photograph of Mission Beach on one wall. When he and his wife arrived in San Diego, they couldn’t believe how “underdeveloped” Mission Beach was in comparison to some of the other beachfront spots in the county and the state.
“We looked at Mission Beach and said, ‘What are we missing?’” Cornell said.
The Cornells started with the Surf Rider hotel, a Mission Beach landmark that had fallen into disrepair. They converted the hotel into 11 two-bedroom, two-story condos, which all sold in December 2004.
“We could’ve ripped it out and just built whatever, but it’s still the same footprint,” Cornell said. “We’re into this whole Zen thing of what this place is.”
Neighbors came up to him and thanked him after that, which was better than getting sued in La Jolla, Cornell said wryly. And it snapped him into action — without neighbor opposition, the beach left itself open to massive development.
“Ken and Beth really believed in Mission Beach,” said Kathy Evans, a longtime Realtor in the area. “Their vision was Mission Beach could really be another Newport Beach.”
Cornell’s office is tricked out like one of his condos. While showing a visitor some pictures of his buildings on a huge flat-screen computer monitor, he clicked a few buttons on a remote control. The office filled with the theme song from the movie “Chariots of Fire,” which plays for every visitor to Cornell’s website.
After the Surf Rider, the Cornells built their own house on Ocean Front Walk and picked up many more parcels, paying “top dollar” to the former owners. With financial backers including the deep pockets of the Molasky Group of Companies, a heavy-hitting real estate development company in Las Vegas owned by Beth’s family, they started buying parcels and designing homes with views in mind.
When describing his work, Cornell speaks excitedly about epoxy-coated rebar and ways of engineering cement to keep it insusceptible to water damage. He describes himself as “insatiably interested in products,” a fanatic of high-tech home appliances. The brochures for his condos read like a catalog of top-of-the-line gizmos. Even the toilets are brand-name.
Those inclusions add cost. A two-bedroom, 770-square-foot condo sold last month for $2.2 million. A two-bedroom, 1,090-square-foot condo sold last August for $2.725 million.
A 281-square-foot studio sold last May for $761,000 — about a $90,000 discount from the original asking price, but still about 20 percent more per square foot than the most expensive penthouse on the resale market in downtown San Diego.
Cornell said their units sell for between $2,000 and $3,000 per square foot. Top downtown units go for $1,000 or $1,100 a square foot.
Cornell has refused most requests from individual homeowners to design their homes. “I make a lot more money if I do this for myself,” he said. But there have been a couple who’ve secured his services.
“I tell them, ‘I’m not cheap, I’m expensive,’” he said. “And the buyers we’re talking about say ‘I don’t care.’”
Eighty percent of the buyers of these condos come from Arizona, Cornell said. Many of the rest come from Canada and other countries.
And he claims he’s never repeated a floor plan, unlike some cookie-cutter developers who are “on cruise control” building boxes on the beach. Cornell came to San Diego to retire. If he was just building units to maximize square footage, he’d have quit by now.
“I would not be working if that was what I was doing,” he said. “I’d be playing volleyball, or fishing on my boat.”
Cornell estimates there are only 27 lots left between south Mission Beach up to Pacific Beach Drive that might ever become available for development. He’s about to close escrow on one, he said.
“When you look at these lots, I want to be the guy that built every single one of these,” he said.