San Diego Retail Revs Up

SAN DIEGO-While the residential sector, particularly condo conversions, picks up the lion’s share of media coverage in Downtown San Diego, the area’s retail industry is humming along nicely. A report released by the Burnham Urban Retail Group reveals that more than 1.1 million sf of retail space is under construction or in the pipeline.As with many of the projects downtown, the retail developments owe their green-lit status to the dynamic success of Petco Park, with 64% of the projects in the East Village area near the ballpark. The rest of the projects are located in Little Italy, Gaslamp Quarter and other core neighborhoods. According to the Burnham report, the hundreds of residential units going up in the area have generated an influx of retail development to meet demand for restaurants and specialty shops.”Most of the major new construction is located in the East Village where more than $1.5 billion in redevelopment has either been completed or is in process, and another $1.4 billion in new residential, hotel and retail development is being planned,” says Bill Shrader, senior vice president with the Burnham Urban Retail Group.The new projects consist mostly of mixed-use developments made up of storefront space as part of mid- and high-rise condo and apartment projects. East Village counts 24 residential projects while Little Italy has four condo projects, each of them counting retail pieces, ranging from 2,000 sf to 20,000 sf.With all the new space hitting the market, the vacancy rate has picked up, growing from 7.1% during the second quarter of a year ago to 7.8% this year. The inventory counts total negative net absorption at more than 52,000 sf.Shrader believes the space will fill as redevelopment projects finish construction. Already on tap are major specialty shops in the Gaslamp area. “The area–particularly along Fifth Avenue–-is seeing an influx of trend-setting retailers like Quiksilver, Puma, Hilo Hattie, Adidas and Borders Books & Music,” adds Shrader.