San Diego Commercial Real Estate; Keeping Current with an ever-changing market
Thoughts for the Month- Summer Wrap up Edition
“Real Estate is an imperishable asset, ever-increasing in value. It is the most solid security that human ingenuity has devised. It is the basis of all security and about the only indestructible security.” - Russell Sage?
The city of San Diego’s real estate department recently formally recommended Midway Rising https://midwayrising.info/ as the winning contender for remaking the 48-acre sports arena site in the Midway District, citing the project’s commitment to a high number of affordable housing units. This recommendation came just days after Mayor Todd Gloria’s announcement in favor of the plans.?
Midway Rising’s plan calls for a total of 4,250 residential units, 2,000 affordable, 250 middle-income, and 2,000 market-rate, a brand new 16,000-seat arena, a 200-room hotel and 20 acres of open space. The group is also proposing 250,000 square feet of commercial space concentrated in a central public plaza. The state defines affordable housing as units reserved for families making 80 percent of the area median income. The median income for a family of four in San Diego is $106,900, according to the state’s 2022 list of income limits for affordable housing units. Its development team is comprised of market-rate housing developer Zephyr, sports-and-entertainment venue operator Legends and affordable-housing builder Chelsea Investment Corp.
The East Village commercial real estate market is going strong, although there’s been a pause in new projects opening as developers catch up on projects that were slowed in 2020 and 2021 due to COVID. A critical project that’s seen as a key element to the neighborhood’s maturation is the East Village Green, a $79.6 million park project that started construction in August with a completion date of early 2025. the 4.1-acre East Village Green will include a 13,657 square-foot community center, an underground parking garage, a children’s playground, an outdoor stage, dog parks, a water fountain that children can play in, and a game area.
Still in the works and widely anticipated is the 5.25-acre Tailgate Park, renamed East Village Quarter. The $1.5 billion project by the Padres, Tishman Speyer, and Ascendant Capital Partners is to start construction in July 2024 and take more than 10 years to complete, under the developers’ agreements with the city. It will include 1,710 residential units, 50,000 square feet of office and retail space, and a 1.3-acre public park. Of special interest but still in its early stages is a plan by Cresleigh Homes for a 37-story apartment tower on Island Avenue between 6th and 7th avenues that would have 443 apartments. With only 52 parking spaces, some see Cresleigh’s East Village project as a test of whether big projects geared almost entirely to mass transit will work. It's no question that the City is focused on making transit-oriented mixed-use and residential projects with high density the priority for development moving forward.
Officials recently celebrated the completion of construction on Snapdragon Stadium – the new home of SDSU Aztec Football, the San Diego Wave Fútbol Club, and a year-round, cutting-edge entertainment venue for the greater San Diego region.?Aztec football has been without a true home stadium since 1967, when the team played in the historic Aztec Bowl. Now, with the vision of SDSU Mission Valley quickly taking shape, the 35,000 seat Snapdragon Stadium is in place to serve the region for decades to come.
On Sept. 3, when the SDSU Aztec football team plays the University of Arizona Wildcats in the season home opener, the stadium’s deliberate, thoughtful design will be on full display. Premium, centralized seating can be found close to the bottom level to bring fans closer to the action, while the Sycuan Piers, inspired by San Diego’s coastlines, provides spectators with a unique view as a portion of the piers juts out toward the field. Snapdragon stadium is one of the first stages of the master plan development for SDSU West, a massive mixed-use campus expansion on the site of the former Qualcomm Stadium.?
Longfellow Real Estate Partners is building its first ground-up life science building in San Diego with a recent ground-breaking ceremony celebrating construction kicking off for the 320,000-square foot Bioterra project. The Sorrento Mesa project replaces a three-building office park that Longfellow bought last year and the office buildings were torn down to make room for Bioterra. This spec lab development is expected to be finished by the Summer of 2024. Averaging 60,000 square feet, Bioterra’s floorplates are bigger than most other lab buildings. “The floorplates are designed in such a way that they can accommodate multiple tenants per floor and the footprint of the building also provides for maximum light penetration despite the larger size of the building", said Nick Frasco, chief investment officer (West) and marketing director at Longfellow. “We continue to invest in the region. We’re constantly evaluating new opportunities. We are certainly dedicated to continuing to grow in San Diego,” Frasco said. “Most likely the majority of what you see from us going forward is growing our ground-up development portfolio in addition to best-in-class conversion opportunities.”?Longfellow Real Estate Partners is the largest privately held investor and developer of life science buildings in the world, with an international portfolio that spans over 15 million square feet – and a 4+ million-square-foot portfolio in the San Diego region.
IQHQ, a biotech REIT in the midst of building a $1.6B R&D hub in Downtown in San Diego along the waterfront (RaDD), has recently purchased the Hyatt Regency La Jolla Aventine hotel in the city for $216M. The deal is the second priciest hotel trade in San Diego in the past five years, eclipsed only by the sale late last year by the $227M sale of the Embassy Suites La Jolla. Earlier this month, IQHQ purchased the Aventine Atrium next door to the Hyatt for $11M; last year, the REIT bought the adjacent 11-story Aventine Office Building for $170M and a nearby retail property, including restaurants for $35M.?IQHQ has plans on eventually converting this iconic San Diego site to a modern life science campus in the heart of UTC.?
One of San Diego’s most car-dependent neighborhoods could one day be a beacon of pedestrian-friendly urban design. That’s according to a recently unveiled plan for San Diego’s Mira Mesa neighborhood.?The changes are set to be considered by the city council this fall, and could drastically change the layout of an area that many say is a textbook example of outdated urban design, if passed. The boldness of the plan is raising questions about whether the changes are realistic. Jeff Stevens, who lived in Mira Mesa for 40 years and is chair of the Mira Mesa Community Planning Group said, “The idea is to redevelop certain areas where there are shopping malls, where there's industrial businesses, and to make those pedestrian friendly. There are a few other pedestrian improvements along the major roads, but I think to say it's turning the whole community into a pedestrian-friendly area is a bit of an overstatement," Stevens said. The draft plan includes the construction of an aerial skyway. "There are a lot of transit improvements in it that will require either a bond issue or a tax increase. The Skyway is a good example, though I like the concept. It's not clear that the public is willing to pay for that," Stevens said.
San Diego County’s median home price dropped for a second month in July as rising interest rates spooked many buyers. The median home price was $800,000, said CoreLogic/DQNews on Wednesday. That was down from a peak of $850,000 in May. The median price is still up 9.5 percent in a year. Prices were down across Southern California, and much of the nation, as interest rates climbed from historic lows. Lack of enthusiasm from buyers has also meant fewer sales. San Diego County had 2,667 home sales in July, down 18 percent from the previous month.
Tech giant Apple will require corporate employees to be physically present in their offices three days a week, beginning after Labor Day weekend on Sept. 5, Bloomberg reports. The move comes after Apple delayed a number of earlier plans to mandate time in the office, which the company attributed to spikes in the number of Covid cases. Under the latest plan, employees need to be in their offices on Tuesdays, Thursdays and a third day to be determined on a case-by-case basis. That represents a change from Apple's previous plan for in-office work, which would have required a physical presence on Mondays, Tuesdays and Thursdays. It will be interesting to watch how other companies react towards this news and shape their internal policies moving forward.?
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Thank you for your advice! I appreciate your continued support and readership. San Diego's strong industries and resilient economy have indeed allowed us to weather potential recessions better than many other cities. I will continue to showcase the major news stories in the real estate industry to keep you informed. #Thankful #SDCRE
Principal & Co-Founder at Steel Peak
2 年Great write up! Can't wait to see the Aztecs take it on Saturday
Director of RAM Construction, USD Master of Science in Real Estate (MSRE) '25
2 年I'm excited to watch these projects develop over the next few years! Thanks for sharing, Conor Evans!