John Frager

SAN DIEGO—Development and infrastructure changes abound in the San Diego market, which is seeing progress in all geographical areas and taking advantage of many global trends, John Frager, executive managing director of CBRE San Diego, told attendees at BMC's 21st Annual Real Estate Conference here last week. Frager gave a breakout session presentation entitled “Disruption: The Trends Reshaping San Diego's Built Environment” that listed the various projects being discussed or under construction for the region and how they relate to global trends.

Frager said our proximity to Mexico has become a vital part of our innovation economy. Due to important supply-chain relationships across the border, the Chamber and EDC have made it a point to brand us as a single economic mega-region comprising 6.6 million people generating $250 billion in GDP. San Diego's economy has become more dependent than ever on the efficient movement of goods and people across the border, from the Otay Mesa Port of Entry to the new CTX airport crossing at Britannia Blvd. and the San Ysidro point of entry, which is the busiest land border crossing in the Western Hemisphere. As former Mayor Jerry Sanders, the CEO of the Chamber, recently said while testifying at a congressional hearing to make the point that international trade does not necessarily compromise US national security, “An efficient border is a safe border.” Also, the mayors of both principal cities, San Diego and Tijuana, understand this relationship and have vowed to continue to work together despite some rising national tensions.

A lot has been done in recent years to strengthen economic ties between San Diego and Mexico and improve border access and efficiency, Frager said. Caltrans has done a “nice job” with 905, and Route 11 connects the Otay Mesa POE to 805 and 125, which gives large trucks easy access to the freeway system when entering California while keeping them off of local roads. Route 11 will eventually link to new cross-border port called “Otay 2,” east of the current border crossing; the goal is to operate the new toll POE with a 20-minute border wait time by leveraging a host of new border-crossing innovations and technologies.

Frager also mentioned another new border crossing, the Cross Border Express Terminal. “I think this is a great example of how private enterprise can be successful much quicker than a government-run operation,” he said. The privately funded $120-million project opened in December 2016 and consists of a passenger bridge and terminal that gives ticketed passengers access between Otay Mesa and Tijuana International Airport. In its first full year in service, the passenger bridge and terminal handled more than 1.3 million ticketed passengers, well ahead of the expected 1 million, said Frager. Now, flights out of Tijuana have increased based on demand, and the facility is on track to handle a projected 1.8 million passengers in 2017 and 2.3 million in 2018. The facility was built it so that it could expand; in fact, operators are in the process of submitting plans to the city of San Diego to add more parking facilities, as well as adjacent restaurants, hotels and meeting spaces. Nearby, belly and heavy cargo areas are being built in order to divert large trucks from local roads, and adjacent Otay Mesa land could see new stores, restaurants or hotels to serve travelers.

Other impact projects Frager mentioned include:

  • Brown Field Metropolitan Airpark, a multi-phase, mixed-use project that includes $1 billion in improvements on 331 AC. ​Developers aim to move forward later this year, and, when complete, the site will have new operations, hangars and facilities for small and corporate-owned aircraft​,. Also planned are hotels, retail and industrial
  • San Diego Zoo's relocation institute. An “optimistic” timeline has the first buildings occupied in three years (as of January). The entire development of the site could take two decades and will have an enormous effect on the surrounding real estate.
  • The San Diego Bayfront has several undeveloped properties that were missed during the last cycle, but should be underway soon. The Port of San Diego announced early last year the completion of an important land exchange with Pacifica and the California State Lands Commission. The existing RV park will be replaced by a resort conference center as part of the Bayfront master plan.
  • In the Barrio Logan area, BAE Systems invested more than $100 million on a new dry dock and related facilities. This new dry dock is close to double their original dock and will enable them to significantly expand their ship-repair operations, including contracts with the private sector and the military.
  • In Downtown San Diego, $6.4 billion in 63 projects are either under construction, planned or in review. There are currently 24,744 housing units Downtown, and 1,811 new units were completed in 2015-2016, with 8,106 more are in the works—a roughly 40% increase in housing units in a short period of time.
  • Just east of the Gaslamp Quarter, the East Village area of Downtown is rapidly growing. Makers Quarter, a new urban neighborhood promoting arts, culture and innovation, is one project that has catalyzed revitalization. Broadstone at Makers Quarter and StreetLights at Makers Quarter will add 565 luxury residential units. The site is also planning up to 1 million square feet of office and 145,000 square feet of neighborhood-serving and destination retail.
  • The nearby IDEA District will add more to the area, including 292 units of startup housing and another 34 stories and 426 residential units. But even more importantly, UCSD is buying 66,000 square feet of office space to house its new entrepreneurial program. Many believe it is the catalyst that will take Downtown to the next level.

Frager highlighted even more projects in central and North County San Diego, too numerous to elaborate upon here. But the megatrends displayed by these projects throughout San Diego included:

  1. A global economy.
  2. Emerging innovative sectors including life sciences, genomics and self-driving vehicles.
  3. The war for talent.
  4. Workspace options including incubators, accelerators, co-working space.
  5. E-commerce changing big box to “little box on your doorstep” and the demand for last-mile delivery. We still need a better strategy for reverse logistics.

The big takeaway from Frager's presentation was that change is occurring in the San Diego real estate market at a rapid pace, and it's an interesting time to be in commercial real estate.

John Frager

SAN DIEGO—Development and infrastructure changes abound in the San Diego market, which is seeing progress in all geographical areas and taking advantage of many global trends, John Frager, executive managing director of CBRE San Diego, told attendees at BMC's 21st Annual Real Estate Conference here last week. Frager gave a breakout session presentation entitled “Disruption: The Trends Reshaping San Diego's Built Environment” that listed the various projects being discussed or under construction for the region and how they relate to global trends.

Frager said our proximity to Mexico has become a vital part of our innovation economy. Due to important supply-chain relationships across the border, the Chamber and EDC have made it a point to brand us as a single economic mega-region comprising 6.6 million people generating $250 billion in GDP. San Diego's economy has become more dependent than ever on the efficient movement of goods and people across the border, from the Otay Mesa Port of Entry to the new CTX airport crossing at Britannia Blvd. and the San Ysidro point of entry, which is the busiest land border crossing in the Western Hemisphere. As former Mayor Jerry Sanders, the CEO of the Chamber, recently said while testifying at a congressional hearing to make the point that international trade does not necessarily compromise US national security, “An efficient border is a safe border.” Also, the mayors of both principal cities, San Diego and Tijuana, understand this relationship and have vowed to continue to work together despite some rising national tensions.

A lot has been done in recent years to strengthen economic ties between San Diego and Mexico and improve border access and efficiency, Frager said. Caltrans has done a “nice job” with 905, and Route 11 connects the Otay Mesa POE to 805 and 125, which gives large trucks easy access to the freeway system when entering California while keeping them off of local roads. Route 11 will eventually link to new cross-border port called “Otay 2,” east of the current border crossing; the goal is to operate the new toll POE with a 20-minute border wait time by leveraging a host of new border-crossing innovations and technologies.

Frager also mentioned another new border crossing, the Cross Border Express Terminal. “I think this is a great example of how private enterprise can be successful much quicker than a government-run operation,” he said. The privately funded $120-million project opened in December 2016 and consists of a passenger bridge and terminal that gives ticketed passengers access between Otay Mesa and Tijuana International Airport. In its first full year in service, the passenger bridge and terminal handled more than 1.3 million ticketed passengers, well ahead of the expected 1 million, said Frager. Now, flights out of Tijuana have increased based on demand, and the facility is on track to handle a projected 1.8 million passengers in 2017 and 2.3 million in 2018. The facility was built it so that it could expand; in fact, operators are in the process of submitting plans to the city of San Diego to add more parking facilities, as well as adjacent restaurants, hotels and meeting spaces. Nearby, belly and heavy cargo areas are being built in order to divert large trucks from local roads, and adjacent Otay Mesa land could see new stores, restaurants or hotels to serve travelers.

Other impact projects Frager mentioned include:

  • Brown Field Metropolitan Airpark, a multi-phase, mixed-use project that includes $1 billion in improvements on 331 AC. ​Developers aim to move forward later this year, and, when complete, the site will have new operations, hangars and facilities for small and corporate-owned aircraft​,. Also planned are hotels, retail and industrial
  • San Diego Zoo's relocation institute. An “optimistic” timeline has the first buildings occupied in three years (as of January). The entire development of the site could take two decades and will have an enormous effect on the surrounding real estate.
  • The San Diego Bayfront has several undeveloped properties that were missed during the last cycle, but should be underway soon. The Port of San Diego announced early last year the completion of an important land exchange with Pacifica and the California State Lands Commission. The existing RV park will be replaced by a resort conference center as part of the Bayfront master plan.
  • In the Barrio Logan area, BAE Systems invested more than $100 million on a new dry dock and related facilities. This new dry dock is close to double their original dock and will enable them to significantly expand their ship-repair operations, including contracts with the private sector and the military.
  • In Downtown San Diego, $6.4 billion in 63 projects are either under construction, planned or in review. There are currently 24,744 housing units Downtown, and 1,811 new units were completed in 2015-2016, with 8,106 more are in the works—a roughly 40% increase in housing units in a short period of time.
  • Just east of the Gaslamp Quarter, the East Village area of Downtown is rapidly growing. Makers Quarter, a new urban neighborhood promoting arts, culture and innovation, is one project that has catalyzed revitalization. Broadstone at Makers Quarter and StreetLights at Makers Quarter will add 565 luxury residential units. The site is also planning up to 1 million square feet of office and 145,000 square feet of neighborhood-serving and destination retail.
  • The nearby IDEA District will add more to the area, including 292 units of startup housing and another 34 stories and 426 residential units. But even more importantly, UCSD is buying 66,000 square feet of office space to house its new entrepreneurial program. Many believe it is the catalyst that will take Downtown to the next level.

Frager highlighted even more projects in central and North County San Diego, too numerous to elaborate upon here. But the megatrends displayed by these projects throughout San Diego included:

  1. A global economy.
  2. Emerging innovative sectors including life sciences, genomics and self-driving vehicles.
  3. The war for talent.
  4. Workspace options including incubators, accelerators, co-working space.
  5. E-commerce changing big box to “little box on your doorstep” and the demand for last-mile delivery. We still need a better strategy for reverse logistics.

The big takeaway from Frager's presentation was that change is occurring in the San Diego real estate market at a rapid pace, and it's an interesting time to be in commercial real estate.

Want to continue reading?
Become a Free ALM Digital Reader.

Once you are an ALM Digital Member, you’ll receive:

  • Breaking commercial real estate news and analysis, on-site and via our newsletters and custom alerts
  • Educational webcasts, white papers, and ebooks from industry thought leaders
  • Critical coverage of the property casualty insurance and financial advisory markets on our other ALM sites, PropertyCasualty360 and ThinkAdvisor
NOT FOR REPRINT

© 2024 ALM Global, LLC, All Rights Reserved. Request academic re-use from www.copyright.com. All other uses, submit a request to [email protected]. For more information visit Asset & Logo Licensing.

Carrie Rossenfeld

Carrie Rossenfeld is a reporter for the San Diego and Orange County markets on GlobeSt.com and a contributor to Real Estate Forum. She was a trade-magazine and newsletter editor in New York City before moving to Southern California to become a freelance writer and editor for magazines, books and websites. Rossenfeld has written extensively on topics including commercial real estate, running a medical practice, intellectual-property licensing and giftware. She has edited books about profiting from real estate and has ghostwritten a book about starting a home-based business.

carrierossenfeld

Just another ALM site