Downtown Development Skews Toward Commercial

Michell: “We have the talent and the workforce in Downtown, and companies are seeing that and are interested in this market.”

SAN DIEGO— Developers are beginning to show interest in building spec office , not just build-to-suits, in the Downtown San Diego market, Downtown San Diego Partnership CEO Kris Michell tells GlobeSt.com. There has been unprecedented level of development activity occurring or in the pipeline for the Downtown market, with more than 9,000 apartment units either under construction or approved for construction currently and hotel construction off the charts as well. But Michell says the area is beginning to eye office development, too. We spoke with her exclusively about the Downtown development market and what to expect over the next couple of years. GlobeSt.com: What stands out for you the most with all of the development projects currently in the pipeline for Downtown San Diego? Michell: There are a total of 3,700 hotel rooms in the pipeline for Downtown San Diego—that’s good and helps to fuel the economy . Also, the Manchester Pacific Gateway project, a planned $1.2-billion redevelopment of the 13.7-acre Navy Broadway Complex , will produce 1.7 million in commercial office that’s going to jumpstart that waterfront area, the front porch of our Downtown. It will completely transform the area. Also, Downtown has approximately 10,000 apartment and condo units in the pipeline. In addition, Nat Bosa’s Pacific Gate project is notable. The architecture is great. We met with Nat two years ago, and he was talking about this project. He said he had a model, but he didn’t like it—he didn’t think the architecture was good enough. He discarded all of it and had his architect start over to create what could be a truly world-class project. He was willing to take that risk. Downtown is a world-class city, so it deserves world-class architecture. Also, the Pendry will be such a cool hotel—I’m very excited about that. I really feel like Downtown San Diego is getting hip and cool. I see quality projects coming up. 7^th & Market is going to be one of the most stunning projects— Cisterra is going to build it, and they have a reputation for such quality. In that project, they’re looking at putting in a Whole Foods and Ritz Carlton , the first five-star hotel in Downtown San Diego. When you combine that with the commercial, residential and on-site affordable , as well as the waterfront (it’s rumored that Rob Lankford is building an Intercontinental Hotel there), we’re seeing quality, and that is exciting. The choices developers are making for Downtown are the right choices; they’re putting Downtown’s needs first. GlobeSt.com: What type of development do you expect to dominate in 2016 and 2017 in this market? Michell: What I’m hearing is that development is skewing to building commercial. For the first time, we’re having discussions with developers who want to build spec office Downtown, not just build-to-suits. This is changing. We have the talent and the workforce in Downtown, and companies are seeing that and are interested in this market. I think over the next few years, you will see more commercial construction here. GlobeSt.com: What do you see as the greatest hindrance to development in this market? Michell: Processing time is a concern—getting decisions made and being able to move forward. There was some statewide legislation being considered that would have neutered the effectiveness of Civic San Diego , and this could have had a quelling effect on those who want to develop here, but that didn’t come to pass. Having a yes or no answer is important; that certainty and a process is what they are really craving. Besides unparalleled beauty, we have Civic San Diego to help bring that process to fruition. GlobeSt.com: What else should our readers know about development in this market? Michell: Development Downtown is on fire right now. If you’ve ever thought of developing in Downtown, now is the time.