Hines Pauses $4B Riverwalk Project in San Diego

Hines has halted construction on a massive mixed-use redevelopment of the Riverwalk Golf Club in San Diego two years after breaking ground on the project, which when fully built plans for a total of 4,300 apartment units as well as office and retail space.

After completing about $90M of infrastructure and foundation work on the northern part of the 195-acre site, which runs along Friars Road in Mission Valley, Hines has shut down the mega-project and will not resume building until economic conditions improve.

According to a report in the San Diego Union-Tribune, the Houston-based developer cited the high cost of debt as well as high construction and supply costs as the reason for the pause.

“When we started this project, we knew that we would face economic cycles, and the partnership was set up for that. We find ourselves in a moment where there’s some volatility in the markets, but that’s really a blip on the radar screen,” Hines Managing Director Eric Hepfer told the Union-Tribune. “We’ve got everything lined up. When the conditions are right, we will move forward on the vertical side of this.”

The developer also disclosed that it is paring back the initial phase of the project from 937 apartment units to 721. The additional 216 units will be built shortly after the first batch, and the total number of units planned at Riverwalk remains unchanged, the report said.

The Riverwalk project has been in the works since 2017, with the current plan gaining the approval of the City Council in 2020. In addition to 4,300 apartments and condos, the plans call for 1M SF of office space, 152K SF of retail and a new stop on the trolley line, which bisects the development along with a planned downtown-style main street.

Riverwalk also will feature 97 acres of parks, open space, and trails with bikeways and pedestrian walkways that follow the San Diego River Pathway. Real estate investment firm Affinius Capital (formerly USAA Real Estate) is Hines’ equity partner on the project.

Hines is required, as a condition of its agreement with the city, to set aside a total of 430 units at Riverwalk for households earning 65% or less than the area’s median income.

Before the construction pause, the first phase of the project, which began in September 2022 on the golf course’s shuttered northern, nine-hole course opposite Friar Road at 1150 Fashion Valley Road, was expected to be delivered early next year. The southern half of the golf course remains open.