San Diego Commercial Real Estate; Keeping Current with an ever-changing market
Thoughts for wrapping up the 1st Quarter
“The greatest danger in times of turbulence is not the turbulence – it is to act with yesterday’s logic.”– Peter Drucker
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If you’ve been Downtown recently, it’s hard to miss all of the cranes and active development projects that are quickly transforming the skyline.?A couple of the larger projects are Stockdale Partners’ Horton Plaza redevelopment of 1 million square feet of office, lab and retails space, and IQHQ’s massive RaDD project on the San Diego Bay that has plans for 1.4 million square feet of office, lab and retail space making it the largest urban commercial waterfront site along California’s coast. Both of these projects have been targeting life science and technology firms, though pre-leasing efforts have continued to struggle.?With vacancy at historically record high levels Downtown, securing larger tenants is now more crucial than ever. Regardless of a lack of new leases signed, the construction transforming Downtown’s skyline continues at a furious pace. There are major construction projects totaling 312,000 SF of retail space and over 2.8 million SF of office and lab space underway. Kilroy Realty is also looking to build a 137-foot tall development on Pacific Highway with 309,000 square feet of office space, though plans are on hold while market conditions continue to be evaluated.?
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In addition, there are roughly 1,500 new apartments set to open this year throughout East Village, Little Italy and other parts of downtown. After two slow years, San Diego’s downtown didn’t see a ton of new residential units, but major projects that have been in the works are finally opening — all within months of each other. A lot more residents downtown might be welcome news to developers that are banking on tech and biotech businesses moving to the city center. With the highest concentration of housing in the County coupled with massive real estate developments underway, San Diego needs the urban Downtown environment to thrive. It is still shocking that San Diego’s CBD has a reverse commute, meaning more people live Downtown than work there, creating reverse traffic patterns compared to any other urban core across the Country. ?With landlord’s becoming hungrier for new tenants and to fill empty space, it will be interesting to see if company decision makers start seriously considering the live/work environment that Downtown offers.?Though Downtown has the most development taking place with the highest levels of vacancy, it also boasts the highest numbers of recorded homeless people in the City’s history.?It’s no secret that this issue is hurting business and residents that would prefer other markets where this is not such an every-day issue and part of life. The homeless issue needs to be improved for Downtown San Diego to truly reach it’s potential as a model urban core for a gateway city.??
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Something that should further help to create the live/work differentiator for Downtown would be new plans to create a seven-block pedestrian plaza in the Gaslamp Quarter. These plans recently got a key unanimous approval from a City Council committee Wednesday, the first ever vote by city officials on the long-awaited project. ?Banning cars and parking on Fifth Avenue between Broadway and K Street is expected to make the area a magnet for tourists and locals, helping fill vacancies in the Gaslamp and changing the landscape of downtown. The city hopes to eventually add street furniture, public art, trees, murals and possibly outdoor entertainment venues. Officials say it will be similar to the Third Street Promenade in Santa Monica and many public squares in Europe.
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San Diego State University recently selected developer LPC West to build the first three commercial buildings within a larger mixed-use project being developed by the university on the former Mission Valley site of the stadium that long housed the NFL’s Chargers.?After a competitive selection process, the university selected LPC West, a division of Dallas-based Lincoln Property Co., to build the first 315,000 square feet of offices and laboratories at SDSU Mission Valley, a mixed-use western campus extension of the university. Plans are to include several commercial and civic elements open to the general public in multiple phases over the next several years.
LPC West officials said the company expects to break ground on the three office and lab buildings in 2024, with occupancy expected in 2026. These buildings are part of a larger “innovation district” where university researchers will interact with local companies and research institutions engaged in life sciences, technology and related industries. This is an exciting time for SDSU as the Western campus extension takes shape and the men’s basketball team is in the National spotlight with the team playing in its first ever Final Four.?
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Did you know that San Diego International Airport is the busiest single-runway airport in the world? Knowing this helps to highlight how badly the Airport needed a renovation. ?With a price tag of nearly $2.7 billion, construction of a new Terminal 1 at San Diego International Airport is by far the biggest ongoing construction project in San Diego County.?The new terminal, expected to take until 2028 to finish, will transform the traveling experience at SAN – offering redesigned roadways leading in and out of the airport and more gates for planes to a new parking garage, and far more food and beverage concessions. ?The only other projects that come close in size and cost is the nearly $1.4 billion Gaylord Pacific Hotel and Convention Center in Chula Vista and the $1.6 billion Research and Development District (RaDD) under construction by IQHQ on the downtown San Diego waterfront.
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The City of San Diego has launched a new Life Science Industry Pilot Program that aims to revitalize and expand the life science industry in the city. The program, which is overseen by the Development Services Department, is designed to speed up the building permit process by facilitating project set-up, review inspection and occupancy for new and existing life science projects within the city.?Eligible projects include, but are not limited to, tenant improvements for identified life science industry businesses and new buildings for identified life science industry businesses. Participation in the pilot program is limited to ensure all projects get the attention they deserve. The Development Services Department’s project managers are assigned to each qualified project, and plan reviewers with specific knowledge of life industry processes will be assigned to these projects.?
?Described as an "agrihood" community, Fox Point Farms in Encinitas will have more than 200 residential units, an organic farm, a brewhouse and a true farm-to-table restaurant when it unveils later this year in San Diego's North County.? Fox Point Farms community will span approximately 21.5 acres off Quail Gardens Drive, just west of the Encinitas Ranch Golf Course, and will house a total of 250 new residential units, including a mix of for-sale cottages, carriage units, townhomes, and apartments. ?The residential community sits adjacent to a planned 5.5-acre working organic farm operation, which will include a two-story farm-to-table restaurant with its own onsite 10-barrel?brewery, farm stand, community green, event space and more.?Within?Fox Point Farms?residential community, there will be an edible landscape walking trail with citrus and nut trees, an outdoor farm animal area, community gardens, picturesque seating areas, and an approximately 6,000-square-foot recreation center with a fitness center, pool, barbecue grills, fire pits, a bocce court, golf simulator and movie room, and more. There will also be an outdoor community library, dog park and other social spaces.?
San Diego’s Silvergate Bank, which grew fast by catering to cryptocurrency traders, said late Wednesday that it is winding down operations and would liquidate amid mounting losses, customer defections and regulatory pressure. The parent company of the bank, Silvergate Capital, announced after markets closed that it had voluntarily decided to cease operations as the “best path forward” given its deteriorating situation.
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San Diego-based SOCi, which develops marketing software for multi-location brands, said today that it has raised $120M in a funding round.
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Genentech has begun a $50 million expansion of its biotech campus in Oceanside with a new facility that will produce complex drugs for rare diseases and personalized medicine.
The speculative development pipeline in the San Francisco Bay Area's life science market is lengthening even further as developers — and their lenders — prove unfazed by a slowing economy and mounting uncertainty.?Longfellow Real Estate Partners is spearheading the latest addition to the region's biotech development pool after securing $310 million to finance the construction of Avia, its 315,000-square-foot lab and research project in Millbrae, California.
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