City Surplus Land Sales Proving a Bonanza

Many bring sale prices higher than asking prices

By Gene Cubbison
|  Thursday, Nov 20, 2008  |  Updated 1:52 PM PDT
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City Surplus Land Sales Proving a Bonanza

Many locations bring sale prices higher than asking prices

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City Surplus Land Sales Proving a Bonanza

While San Diego's operating budget is bleeding red ink, its so-called "capital improvements" budget is getting big infusions of greenbacks.
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While San Diego's operating budget is bleeding red ink, its so-called capital-improvements budget is getting big infusions of greenbacks.

That's because surplus city land is being sold off at quite a profit, with the proceeds going to city construction projects, deferred maintenance and efforts to comply with the Americans with Disabilities Act. In the first year of a five-year plan to reap $100 million from surplus land, the city has already sold 17 properties and banked about $25 million. 

In many cases, the sales have brought in more than the asking prices approved by the City Council. Only one, involving a single-family residence in La Jolla, required council authorization to lower the price, by about 3 percent.  

"Frankly, any buyer that thinks they can pull a fast one on the city is probably not going to be the buyer we will do business with," City Real Estate Asset Director Jim Barwick said.

"By creating a competitive environment with a number of different buyers," Barwick said, "we've been able to maximize the price."

So it was with a sprawling office complex on 6.4 acres near the Sports Arena.  The asking price of $12.5 million gave way in the marketplace to a sale price of $13.1 million. 

The ground leasehold for Filippi's in Kearny Mesa went for $2.4 million, $400,000 more than the council-approved price.  The 'asking' for a residential fourplex on West Maple in the Middletown area was $700,000  The place wound up selling for $751,000.

City officials praised brokers to whom they have been paying bargain commissions of 1 to 2 percent for commercial property deals.

 "We feel that we've been getting Nordstrom-like service out of our brokers at WalMart prices," Barwick said.

The city didn't need brokers to sell a 1.46-acre San Ysidro parcel and building that was being leased by the Border Patrol. The buyer was Uncle Sam. Sale price: $3 million.

In deciding the timing and prices involved in marketing income properties, the real estate managers and brokers weigh the long-term value of the revenue stream against sellers' money in hand sooner than later.

"Essentially,what we're trying to do is sell these properties when they're at their highest value, as opposed to, 'If we held onto them, that income stream … would be less to the city. So that's the judgment that we make on them," Barkwick said. 

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