San Diego football fans are still reeling from the 2017 exit of their hometown Chargers. Owners of the team decided to relocate to Los Angeles following a failed voter referendum to finance a new stadium. The move is continuing to create ripple effects throughout the Downtown San Diego real estate market with both opportunities and challenges rising in the wake of the team’s relocation.
Does the Exit Effect Surrounding Properties?
Last year’s announcement was not the news developers of the new Ballpark Village taking shape in San Diego’s East Village were hoping to hear. JMI Realty broke ground on the major mixed-use development in 2016. The original master plan had included a new stadium on the 7.1-acre site located at Park Boulevard and Imperial Avenue adjacent to the PETCO Park baseball stadium. Yet Ballpark Village is moving forward even without a stadium anchor with plans to build 3 million sf of residential, retail, hotel and office space. In fact, the first 274-unit residential community opened earlier this year.
Ballpark Village is the latest in a flurry of construction activity with billions of dollars spent on new commercial, residential and public projects in the Downtown/Centre City over the past decade. Apartments have been the standout development since the Great Recession ended in 2009. As of July, there were 10,491 apartments (including 1,042 affordable units) under construction downtown, approved or pending approval according to Civic San Diego, the city’s planning department. The city also is tracking 3,347 new hotel units, 2 million sf of office space and 561,000 sf of retail development that is under construction, approved or pending approval downtown.
One of the largest residential projects currently underway is a 618-unit apartment project at 11th and Broadway that will include about 11,000 sf of retail space. The development broke ground late last year and is expected to be completed by the end of 2020.
Developers also are expected to start construction this summer on the massive Manchester Pacific Gateway development overlooking the San Diego Harbor. Plans for the $1.5 billion project include construction of 1.25 million sf of office space, 350,000 sf of offices for the U.S. Navy, 1,390 hotel rooms and 160,000 sf of retail.
JMI Realty executives have noted that Ballpark Village has been 17 years in the making, which is a reflection of the hurdles standing in the way of major redevelopment projects in the urban core. Other real estate professionals have noted that it is an “exciting time” in San Diego’s history – despite the challenges – as there are some notable properties and sites that are poised for redevelopment. According to the San Diego Union Tribune, some of those high-profile sites include Manchester’s Navy / Broadway complex, rental car lots on Harbor Island and the Charger’s former home at Qualcomm Stadium. Some ideas being floated for the football stadium, which first opened in 1967, include accommodating expansion of the SDSU campus or building a facility for a new MLS soccer team.
San Diego’s Continued Growth
That redevelopment activity, along with a strong economy, is fueling fresh interest from both investors and developers looking to piggyback on that momentum. According to Reonomy data, property sales jumped 29% in 2017 to reach $18 billion. Vacant land accounted for the bulk of activity with a total of $7.9 billion in sales across more than 1,500 individual transactions. Retail, industrial and multifamily each reported more than $3 billion in transactions last year, while office trailed with just $286 million in sales recorded. Reonomy also noted that sales are off to a slower start this year with $2.8 billion in properties trading year-to-date as of June.
Some see a bright future for San Diego – even without an NFL football team. To its credit, the city is one of the top 10 visitor and meeting destinations in the U.S. and the region welcomes more than 35 million visitors each year. It also is home to a diverse economy that ranges from tech and research firms to the military with an unemployment rate that is currently hovering at about 2.9%.
Although growth is occurring across the metro, Downtown San Diego remains an important hub for current and future growth with more than 31,000 residents, 81,000 employees and 4,000 businesses, according to the Downtown San Diego Partnership. Some forecasts are predicting that downtown will absorb the majority of the region’s population growth through 2030. So, it’s likely that investors will continue to look for investment opportunities in and around that growing urban core.
If you’re interested in more market insights, Reonomy offers real-time access to detailed property data that business owners, investors and commercial real estate professionals need in today’s competitive marketplace. Try Reonomy for free today.