OCEANSIDE -- Oceanside's downtown could eventually resemble San Diego's Little Italy. CityMark Development officials said Tuesday that their company has purchased five vacant city blocks in the heart of the downtown beach area from Catellus Development Corp., a real estate trust.

Jane McVey, the city's economic development director, said Tuesday that CityMark plans to build a mid-rise development similar to the buildings of Little Italy in San Diego's downtown area, featuring vibrant street scapes, small retail stores and coffee shops with condominiums above the retail and commercial development.

"It's a wonderful project," McVey said. "It speaks well for the future of downtown."

Three of the lots are directly east of and adjacent to three hotel properties in the works -- one by developer Jim Watkins and another by one of three finalists competing for the city's approval. The three lots are bounded by Myers Street, the railroad tracks, Civic Center Drive and Seagaze Drive, and all three are about an acre, or 43,560 square feet.

One of those three lots is just east of the Fairfield time-share project designed by Watkins, and the two other parcels are just east of the two lots where the three finalists want to build a resort hotel.

The two other lots are east of the railroad tracks. All are bounded by the railroad tracks, Cleveland Street, Pier View Way and Seagaze. Each is about 55,000 square feet, said CityMark President Rich Gustafson. "We hope to plan a mixed-use urban project that will help revitalize downtown Oceanside," he said. "That is our trademark."

McVey said CityMark closed escrow on the properties even though the city hasn't approved plans for the development yet, a sign the company has confidence it can win city approval for its project.

Gustafson said he formed CityMark five years ago, and that it focuses solely on urban, mixed-use projects.

CityMark has already built and sold three projects -- the Doma in Little Italy, a town-house project in San Diego's Cortez Hill, and a town-house and retail project in downtown La Mesa. The company is in the process of building and selling two mixed-use buildings in the ballpark district in downtown San Diego near Petco Park, along with another project in Hillcrest.

Gustafson said that in addition to the Oceanside project, the company is working on a development in Las Vegas.

Although the project in Oceanside is zoned commercial and allows for mixed-use developments, the five blocks are part of a nine-block area in which the city has an established master plan. The plan requires that the nine-block area near the beach have a total of 240 hotel rooms.

If the resort hotel is built, that would free the owners of the other properties of the hotel room requirement. However, until the resort hotel project is under construction, the owners of all the lots in the master plan area are required to build their fair share of the hotel rooms.

That would mean that either CityMark needs to wait until the hotel resort is under construction -- which is estimated to be in 2008 or later -- or build about 130 hotel rooms as part of its project. The hotel room requirement was the reason Watkins included 32 hotel rooms in his time-share project that was approved in late 2003 and was later sold to Fairfield Resorts.

Gustafson said his plan is still "fluid" in terms of exactly what his project would look like and when it would be built.

He said that building a hotel as part of the mixed-use project was "one of the items on the table" because "not a lot of people want to wait five years to build."

CityMark declined to disclose, citing confidentiality, how much it paid Catellus for the five lots, which are being leased by the city for parking.

Catellus was founded in 1984 to conduct the non-railroad activities of the Santa Fe Pacific Corp., according to the company's Web site. The company was then spun off as a separate public company in 1990.

In 2003, Catellus announced it would restructure its business to become a real estate investment trust, and the change became effective on Jan. 1 of this year, its Web site stated. Catellus has since divested some of its holdings, such as the properties in Oceanside.

Contact staff writer Rob O'Dell at (760) 901-4067 or rodell@nctimes.com.