The Perfect Storm for Downtown SD Office

Michell: “The biggest awakening is that the innovation economy space will have a ready workforce Downtown.”

SAN DIEGO— Millennials and Gen-Xers are among Downtown San Diego’s largest, best-educated and most-affluent demographic groups—and they’re leaving the submarket to go to work, Downtown San Diego Partnership ‘s CEO Kris Michell tells GlobeSt.com. The firm recently revealed the results of its demographic study, with UCSD Extension program, of the Downtown market. The study found, among other things, that young professionals want to both live and work in Downtown, but they are forced to commute out of the city for work because that’s not where the jobs they seek are located. We spoke exclusively with Michell about the study findings and how the commercial real estate community can capture this growing Downtown demographic group. GlobeSt.com: What were the big takeaways from your recent demographic study with UCSD? Michell: I’d like to start by talking about the reasons why we did this report. In 2013, the Downtown San Diego Partnership led an effort to engage thousands of San Diegans to prioritize the needs of Downtown San Diego. It was a 20-year vision plan—really a 20-year to-do list—with evolved goals and strategies to help the economy . It was groundbreaking at the time, but it also shed light on how much we really needed Downtown’s current demographics and empirical data to help determine if we were moving in the right direction. We needed to know who was working and living Downtown and why the urban core was different. We suspected there was this quiet brilliance in Downtown, but could it be measured with quantitative and qualitative data? That led into the need for the study. Through the study, we found that Downtown is full of young, bright, highly educated professionals. We now know that of the 35,000 residents Downtown, 28% are in the 30-to-39-year-old age group. We also found, interestingly enough, that 51% of Downtown residents have a bachelor’s degree or higher, and 21% have a graduate or medical degree. Downtown is a much higher-educated workforce statistically than the rest of the county, and the average income Downtown is approximately $73,000 a year (countywide average annual income level is $59,000). So, we have a lot of younger, highly educated and more-affluent folks living Downtown. We also found that Downtown is in a regional employment center—it’s an innovation hotspot and an economic driver for regional growth. There are more than 3,600 businesses Downtown and 137,000 employees, and 87% of them commute in and out of Downtown every day. This presents both an opportunity and a challenge. We are creating that ecosystem where innovation firms can thrive and grow. When you have a collection of innovative and co-working spaces , the by-product of that is an open environment. Also, we found out that Downtown is a highly amenitized, urban, walkable community. GlobeSt.com: Are there new demographic groups emerging that are interested in the Downtown San Diego market? Michell: It didn’t surprise me because I’m one of them, but Baby-Boomers are boomeranging right back into the urban core. It’s pretty exciting. Similar to Millennials and Gen-Xers, we want to walk out of our house and do things. Upkeep of the home is not how Baby Boomers want to spend their later years—they want to travel and do things. And they want to give back—Boomers are volunteers. We also have companies themselves Downtown, like Underground Elephant , that are giving back to charities. Downtown is an interesting community—everybody knows everyone. It’s a wonderful, tight-knit community that’s highly collaborative and connected. GlobeSt.com: What is the next phase of development for Downtown that this study indicates should occur? Michell: We have individual communities and neighborhoods, so the next part flowing is the East Village: Makers Quarter and I.D.E.A. District are just going to explode. Residential leads commercial, always, and now we’re seeing commercial coming in. We will see just what that commute does. A lot of people who would love to work Downtown and live there now don’t have the option. They will look for opportunities to actually find jobs Downtown. The biggest awakening is that the innovation economy space will have a ready workforce Downtown. This is a fun time to be doing this. You know that tipping point that occurs in communities and in real estate? Well, we just passed it, and momentum is now carrying us. It is going to be great. We are moving forward rapidly and in a great way. Those who are smart in the commercial space are building creative-office space. That momentum is there. GlobeSt.com: What else should our readers know about this study? Michell: We will update it annually. There are so many great nuggets and kernels of information in it; we’re very excited. Stay tuned for an exclusive GlobeSt.com interview with Mary Walshok, associate vice chancellor for public programs and dean of extension at UCSD, about the methodology of this study and what the real estate community is missing out on in the Downtown San Diego market. San Diego CRE is in a solid recovery phase with some creative trends leading the way.   Are You In The Know?  Join us  at RealShare SAN DIEGO on May 17 for impactful information from the leaders in San Diego CRE. Learn more .