CARLSBAD, CA—Zephyr Partners is leading the development of a new 35-unit project called Ocean Street Condominiums here at 2303 Ocean Street, and has gained $13 million in equity for the development.

Los Angeles-based George Smith Partners arranged the loan with a New York-based investment management firm. The property currently is occupied by a 51-unit apartment complex. Zephyr and its partner are now seeking construction financing and plan to demolish the current structure and break ground on the new project this year with completion set for 2014.

Malcolm Davies, senior vice president with George Smith, said in a statement that the location of this property is reflective of an emerging trend in the commercial real estate industry. “This project’s prime coastal location is a real indication of where the market is headed in coming years,” explained Davies. “We will continue to see acquisitions of well-located, coastal properties as the housing market steadily recovers and investors seek to return to coastal development.”