The Missing Piece of DT San Diego’s Resurgence

Downtown San Diego is missing the ‘work’ in its live-work-play environment. In fact, the majority of residents are traveling out of the downtown area to work. In recent years, the market has seen a resurgence with tremendous residential construction and retail growth; however, the office market has yet to follow. There is a surge of new projects that will hopefully fuel office growth. The jewel of office projects is Stockdale Capital Partners’ renovation of Horton Plaza, a 10-acre retail mall, into a creative office campus with retail. The project is expected to fulfill the ‘work’ void.

“For the last 20 years, we have done a great job of growing residential in Downtown San Diego, but we haven’t done a good job of growing jobs,” David Malmuth, a partner at I.D.E.A. District. “The result is that we have the live and the play, but we aren’t so great on the work. Of the nearly 40,000 people that live in Downtown San Diego, 75% of them are commuting to jobs outside of downtown. We have to approach job creation downtown with the same intention that we have approached residential. We have a ton of assets: talent, lifestyle, walkability, transit and a ton of residential.”

Stockton Capital Partners plans to redevelop Horton Plaza into a tech and creative lifestyle campus targeting tech firms. The first phase of the project will begin early next year and will deliver in 2020. It is the perfect project to transform San Diego’s office market. “In the center of downtown on this very crucial block, you need to create something that can act as an economic engine for the next phase of growth, and I think the Stockdale guys have it right,” says Malmuth. “That is not easy for everyone in the city to accept because Horton has iconic status. This project has the potential to be transformative.”

Horton Plaza is the highlight of office projects, but it isn’t alone. There are a handful of developers building out creative office space, including 100,000 square feet of renovated warehouse space that Malmuth’s firm is spearheading. In total, the projects will bring 1 million square feet of new office inventory to the market. “We haven’t had the product in Downtown San Diego that has enabled a big tech tenant to move,” says Malmuth. “If you find the right tenant with growth opportunity and you have the space, you can be very successful.”

It makes sense to target tech companies. There are ample universities in San Diego producing phenomenal tech talent, and there are 120 start-ups in the market. Mostly, though, the tech sector has been responsible for the growth of cities along the West Coast. However, there aren’t enough tech companies in San Diego to accommodate this development. “We don’t think all of that is going to be absorbed by San Diego firms,” explains Malmuth. “Stockdale is planning to go to the Bay Area and recruit businesses by selling talent, quality of life and cost of doing business. They believe that they are going to be very successful, and I hope they are right.”