November 6, 2018 Comments (0) Views: 4174 Design, Real Estate, Small Business, Startups

Downtown’s Missing Link: Just Add Office Space

Between Horton Plaza and a handful of other creative developments, downtown is finally getting some fresh new office spaces

Downtown San Diego has residential and retail space aplenty. Numerous higher-end high-rises are going up or already housing tenants, especially in the East Village. But where do people work? There are many options already, especially in the booming gig economy, but there’s still room for the 92101 to grow. For comparison, twice as many people live in San Diego as in Denver, but the workforce in downtown Denver tops 130,000, while San Diego’s downtown has just about 81,000. Savvy developers are creating spaces to house downtown San Diego’s growing tech sector, startup community, and other businesses: Projects like IDEA1, the Makers Quarter, large mixed-use developments like Shift and Manchester Pacific Gateway, and Stockdale’s upcoming transformation of The Campus at Horton. This boom in residential development indicates that developers have recognized a need for flexible, innovative office and retail options, says Downtown San Diego Partnership President and CEO Betsy Brennan.

“Now we’re seeing a progression toward creative office development, as companies seek to tap into the local talent, resources, and vibrant urban lifestyle unique to downtown. We need to be equipped to supply the spaces for companies looking to put roots here.”

Here’s a look at a few of the projects in the works.

The once-bustling Westfield Horton Plaza mall is getting a second life as retail and office complex The Campus at Horton. According to the developer, Stockdale Capital Partners, it has the potential to bring more than 3,000 jobs and $1.8 billion in annual economic impact once it’s completed in 2020.

“With record low office vacancies and a rapidly growing pool of talent in Downtown San Diego, demand for creative office space is in extremely high demand,” said Daniel Michaels, Stockdale’s managing director.

Also set for development is Horton Plaza’s 162,000-square-foot neighbor at 777 Front Street, which comes with a valuable amenity downtown: 2,000 parking spots, according to leasing agency JLL. Availability is expected fourth-quarter 2019.

The six-story “live-work-create” community IDEA1 is a cornerstone of the IDEA District vision for the area as an “innovation and design jobs cluster.” Philadelphia digital marketing agency Seer Interactive chose IDEA1 for its West Coast office.

The future Cisterra tower, slated for Seventh Avenue and Market Street, will bring 160,000 square feet of office space to the area, along with residences, retail, a grocery store, and a Ritz-Carlton. Completion is expected in 2022. “Vacancy rates are down, and tenants have been interested in downtown but not able to find the blocks of space they need to make the move,” says Cisterra’s principal, Jason Wood. Out-of-towners still gravitate toward the UTC/Del Mar/Sorrento Mesa market, but “there’s still the desire from a lot of companies to be more urban, where they’re closer to mass transit options and amenity-rich environments.”

Downtown recently saw its first new multitenant office building in over a decade, the zero-net-energy project Block D in the Makers Quarter. Coworking company Spaces occupies more than half of it. Also in the mix is the five-building, 143,000-square-foot property that houses NewSchool of Architecture and Design; Paragon Real Estate Investments bought the property for $34 million in 2017 and has renamed it The Ratner.

Ever since the coworking era kicked off about eight years ago, more and more people have forsaken the distractions of working from home or the strings attached to traditional office jobs in favor of a desk in a shared workspace. Workers in a variety of industries—it’s not just creative types; tech and biotech companies have jumped on board, too—dig the flexibility, and perks like free craft beer, yoga classes, foosball, and networking opportunities. Not to mention the moral support of fellow desk workers dutifully clicking away.

According to real estate firm Cushman & Wakefield, of the 1.2 million square feet of space rented in San Diego County by companies like Downtown Works, WeWork, and Regus, one-fifth is located in downtown. That acreage is likely to grow, as the latter two are reportedly scouring downtown for more. At 600 B Street alone, WeWork has 1,700 coworking spaces. Two or three hundred dollars a month buys a “hot desk” at these facilities (an unassigned desk that may be used by multiple workers), while $1,000 might buy a small team a private office suite of its own.

As coworking grows downtown and elsewhere, look for it to repurpose underutilized spaces now devoted to retail and other struggling sectors.