SAN DIEGO – Ambient Communities, based in Encinitas, is building a $100 million South County apartment complex.

Overlooking Otay Valley Regional Park and the Otay River on a 5.92-acre site, Palm & Hollister Apartments will have 198 apartments at 555 Hollister St. in a mix of one-bedroom, two-bedroom and three-bedroom apartments.

“The whole project is facing out toward the river valley. You get a great view to the river valley. You can see the ocean and the hills in the background,” said Duncan Budinger, director of development for Ambient Properties.

The project is due to open in the first quarter of 2027 and is the largest apartment development under construction in South County, according to Budinger.

“There really hasn’t been any large, new housing projects built in South County in a while. This is the first one of its size,” Budinger said.

The apartments will be spread over six three-story buildings and eight two-story buildings, according to Budinger.

“What really sets this property apart from the other market-rate units that were built down in that area is, it’s spread out. It’s not built up, and it has these large recreation areas,” Budinger said.

Palm & Hollister Apartments is next to an affordable apartment building being built by National CORE in conjunction with the Metropolitan Transit System (MTS), Budinger said.
Monthly rents haven’t been set yet for the Ambient Communities apartments, but Budinger said that the target market includes young families and people who work at the nearby shipyards and naval base.

The project will have 89 one-bedroom apartments ranging from 542 square feet to 720 square feet, 82 two-bedroom apartments of 863 square feet to 941 square feet, and 27 three-bedroom apartments of 1,180 square feet.

“We wanted to make sure that we have ample amenities for this project, “Budinger said.
They include a 9,000 square-foot courtyard with a pool and spa, several seating areas, a playground and a dog run.

“It’s almost like a little park,” Budinger said.

There’s also a separate recreation building with a gym, lounge, indoor kitchen, coworking spaces, leasing office and mailroom.

Construction Loan

Palm & Hollister Apartments is next to the Palm Avenue MTS trolley station.

Because of its proximity to the transit, zoning would have allowed Ambient Communities to build the apartment complex with no parking, but Budinger said that adding parking makes the project more attractive to likely tenants.

“We know we couldn’t rent those units without parking,” Budinger said. “We have 262 parking spaces.”

As originally planned, the project was going to be smaller with about 110 apartments, but the city wanted more apartments on the site, Budinger said.

The property had not been developed before because it had no access to Palm Avenue or Hollister Street, Budinger said, but Ambient Properties worked out an arrangement with MTS to share an entrance with the affordable housing project.

A $66.15 million construction loan through Genesis Capital was arranged by Northmarq’s San Diego Debt + Equity team led by Aaron Beck, Bryce Quezada, Conor Freeman and Wyatt Campbell.

Beck said that the loan allowed Ambient Communities “to take advantage of the declining short-term interest rate environment.”

“Compared to 24 months ago, things have improved, especially in the last six to nine months. A lot of banks are back in the marketplace with construction dollars,” Beck said, adding that, “There’s more money in the marketplace than deals to go round.”

“It doesn’t mean that every deal that has permits or is permit-ready is going to get done. It’s a case-by-case basis,” Beck said.

Ambient Communities
FOUNDED: 2011
HEADQUARTERS: Encinitas
PRINCIPALS: Robert Anselmo, Robert Horner and Wade Hall
BUSINESS: real estate development
EMPLOYEES: 20
WEBSITE: www.ambientcommunities.com
CONTACT: 760-730-1000; info@ambientcommunities.com
NOTABLE: Ambient Communities specializes in the planning, development and construction of new homes, multifamily and mixed-use communities and commercial real estate projects.