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SAN DIEGO—Conversion to office, restaurant and commercial use are a few of the reasons investors are eyeing historic buildings, which require experience and sophistication to mitigate the risks, Paragon's co-founder Roberto Jinich tells GlobeSt.com. PREF, an affiliate of Paragon, recently acquired the two-story freestanding Unicorn Building located at 7^th Ave. and J St. Downtown from Cisterra SEHQ LLC, an affiliated entity of Cisterra Development, adding another urban retail asset to its portfolio of properties in that submarket. We sat down with Jinich for an exclusive interview about Downtown and the market for historic buildings there.

GlobeSt.com: What appeals to you about the Downtown San Diego market?

Jinich: Downtown San Diego has evolved into a vibrant area that offers a live/work/play environment not only for the Millennial generation, but also for empty-nesters. Downtown is a terrific option to accommodate population growth that requires more retail and commercial options without causing more congestion on the roads.

GlobeSt.com: How would you characterize the market for commercial/retail/historic buildings in this submarket?

Jinich: The market for these types of buildings has been very dynamic, with properties appreciating in value. Ownership of retail units in Downtown is very polarized because other than Horton Plaza, there is no real scale. In addition to the challenges presented by the small scale of potential transactions, there are difficulties in dealing with HOAs as well as entitlement and code compliance when the buildings are catalogued as historic. Only very experienced and sophisticated investors can really quantify the risks of owning and operating these types of buildings.

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GlobeSt.com: What trends are you noticing in these types of properties?

Jinich: Renovations and changes of use are strong trends currently happening locally. For example many old warehouses have been converted to office uses with some restaurant or commercial use as well. Many of these conversions are being driven by strong demand for creative-office space in buildings that have character and history. Companies today want to be in a building that exemplifies who they are and that appeals to their workforce.

GlobeSt.com: What else should our readers know about this transaction?

Jinich: There were many moving pieces with the acquisition of the Unicorn Building. In addition to the typical challenges present in real estate transactions, there was the added element of dealing with the requirements and limitations imposed by Sempra Energy's new headquarters.  It took the cooperation and creativity of both the seller and us to make the sale possible once the Sempra Tower was completed.