San Diego Daily Transcript, Residential Real Estate Quarterly

San Diego’s First Condo-Hotel Takes Center Stage Downtown
by Vertical Properties, Inc.

Cole Porter and Frank Sinatra did it. Paris Hilton did it. Eloise, the precocious child of fiction, did it too. They all lived in luxury urban hotels.  Now San Diegans will have a similar opportunity with the development of the Diegan, San Diego’s first condominium-hotel property.

Located at the northern end of the Gaslamp Quarter, at the center of downtown’s renaissance, The Diegan is the first of its kind in the region. Though novel to San Diego, the condo-hotel model is not new; it is a real estate development and investment trend now prevalent in major cities across the nation, Canada and Europe.

While some may chose to live at The Diegan year-round, most people do not purchase condo-hotel units as primary residences, but as second home investments and getaway destinations.

The Diegan will be a getaway destination. The condo-hotel is being developed in conjunction with the House of Blues and will feature an exclusive House of Blues Foundation Room club, Whiskey Bar lounge, premier health spa, fitness center and pool, and two signature restaurants by world renowned chefs.

The Diegan includes 161 studio and one-bedroom suites and 24 “Luxe” penthouse suites. The studio and one-bedroom suites range in price from $400,000 to $800,000. Luxe penthouse suites begin at $1 million. All units will be delivered to buyers furnished and accessorized with such luxury appointments as full marble baths and plasma displays.

The building was designed by Tanner-Hecht Architects of San Francisco and incorporates the historic façade of the 19th century Jessop Building on Fifth Avenue.  Interior finishes will be created by the Rockwell Group, designers of W Hotels in New York, Emeril’s restaurant in New Orleans, and Cirque du Soleil’s permanent home at Walt Disney World.
           

The project is developed by Orange County-based 5th Avenue Partners, LLC. Vertical Properties, Inc., is directing sales and marketing efforts and is now building a preliminary buyer interest list for the project.

According to Lee Mullinax of Vertical Properties, condo-hotel units are sold as condominiums but managed by the hotel. Owners have the option of placing their units into the hotel rental program. This affords buyers the opportunity to earn revenue from stays by area visitors.

Since September 11, 2001, hotel occupancy rates in San Diego have seen a strong comeback.  Tennessee-based Smith Travel Research reported that San Diego hotel occupancy averaged 85.5 percent last month.

Condo-hotels are not the time-shares of yesterday, says Mullinax. Buyers own their own unit and are not restricted to a one or two week stay. Diegan investors who elect place their unit into the hotel’s rental management program can stay up to 28 days per year in any configuration of time they choose.

The advantage for owners who chose to rent their units through the hotel program is they avoid the responsibilities that come with being a landlord. Plus, their vacation home is available for their use with a simple reservation anytime they want to visit. According to Mullinax, Diegan condo-hotel buyers will be affluent, well-educated and well-traveled residents of the greater southwest. They expect strong sales to come from the San Diego, Los Angeles and Phoenix markets.
Diegan owners will enjoy all of the luxury accommodations and services that one expects from a five-star hotel including chic décor, personal concierge services, access to spa and fitness facilities, world-class dining, and premier club access to the House of Blues.

The condo-hotel trend started in destination resort cities and has recently moved to upscale urban cities with vital downtown areas. Similar projects are under development throughout southern Florida and in cities like San Francisco, Boston, Washington D.C. and Las Vegas.

Condominium hotels are sometimes associated with prominent four- and five-star hotel operators such as the Four Seasons in Miami, Florida; Ritz Carleton in Key Biscayne, Florida; and the Trump International hotels in Chicago and Las Vegas. 

The Diegan will be distinguished by its position as a stylish and exclusive entertainment destination, building on the reputation House of Blues and the success of downtown San Diego’s thriving Gaslamp Quarter.

265 West Market Street · 690 West B Street · San Diego, CA 92101
 Phone: 619.236.9393 · Fax: 619.236.9399 · VerticalVillageRealty.com