Hillcrest apartment building sells for $37.4 million

A former hotel converted into luxury apartments in Hillcrest sold this week for $37.4 million.

The 80-unit Warwick building at 606 Washington St., known for a distinct turquoise painted stripe on part of the building, was converted into apartments starting in 2017. It was formerly the Sommerset Suites Hotel, built in 1986.

Orange County-based Spectrum Partners bought the property from SENTRE, a San Diego-based real estate investment firm, which acquired it in 2017 for $19.5 million.

SENTRE made substantial improvements to the site to convert it into apartments. Improvements to the building were assessed by San Diego at $15.3 million last year, or $191,708 per unit.

The Warwick is unique, even by San Diego standards, with its very low vacancy. It has six available apartments, according to its website. Real estate tracker CoStar said the average rent for a studio (438 average square feet) was $1,827 a month and for a one-bedroom (617 square feet), $2,114 a month. It has one two-bedroom, 844-square-foot apartment that rents for $3,071 a month, but is occupied.

The Warwick apartment building in Hillcrest.

(Michael Andrew Anable/Berkadia)

Hillcrest rents have gone up since SENTRE bought the building in early 2017. In the first quarter of that year, the average rent was $1,985 a month, said CoStar. Today, it is $2,189 a month.

Hillcrest has a vacancy rate of 2.8 percent, lower than the 3.5 percent countywide average. The average rent is also lower than the San Diego County average of $2,317, in part because the supply of rentals in Hillcrest is older.

Warwick is located next to Scripps Heath Mercy Hospital and many medical offices. Amenities include a pool, gym, bike storage, social lounge, coffee bar and on-site parking. Pets are allowed but a $600 pet deposit is required and $50 a month for one pet or $70 for two.

The sellers were represented by Rachel Parsons, Ed Rosen, John Chu, and Tyler Sinks of brokerage Berkadia Institutional Solutions.