Stellarum is often called in to advise mixed-use project developers on the most profitable combination of uses. Unlike many other hospitality specialists, we understand other forms of real estate that might be combined with a hotel uses. We are proficient in Reciprocal Easement Agreements, Operating Agreements and HOA issues.

San Diego Hotel and/or Residential Highest & Best Use Project

Stellarum* was retained to assist a developer consider development alternatives for an entitled site in San Diego’s Columbia District. The entitlements were for a hotel and apartments. The developer’s question was whether an all-hotel, all-apartment, or all condominium development would produce the highest returns. Stellarum* conducted complete market surveys of the neighborhood hotel, apartment and condo markets, ideal product types for each use, ideal amenities, net rentable area for each use, the probable key counts for each use given the back-of-house space required for hotel use vs. residential use and the affordable housing in-lieu (impact) fees. With these assumed key and unit counts, we estimated revenues and expenses, and then converted the cash flows into an estimate of value after researching prevailing discount and capitalization rates for each. The absorption period and pricing for the condos was also estimated. We then researched and estimated construction costs, deducting them from the probable values or net proceeds to arrive at a residual land value. The residual values for the 3 uses (hotel, apartment and condo) were compared to determine the greatest residual land value.