Downtown San Diego Development Update
One of the most common questions I get is, “Are there any new condos being built?”. Unfortunately most people are disappointed to hear that it is unlikely we will see new condos in the near future, despite all of the cranes in the city. So if they aren’t building any condos, what is being built?
The City of San Diego put out a “Downtown Development Status Log” in July 2022 with a list of projects. They broke them up into 5 Categories: Discretionary Permits Under Review, Discretionary Permits Approved, Building Permits Under Review, Projects Under Construction; Projects Completed in 2021/2022. To make things easier, I grouped them into 3 categories: “Recently Completed”, “Under Construction”, and “Proposed or Approved”.
Once I added up all of the projects, I was shocked at what I learned. Downtown San Diego has a total of 9,565 projected apartment units between the 55 projects. The 9,565 apartments would consist of 8,629 market rent apartments and 992 affordable housing units (56 off-site, meaning they aren’t located in the actual proposed development). 35 of the 55 projects (63.6%) on the list incorporated apartments into the plans. In addition to a massive amount of apartments, there are also 3,945 planned hotel rooms spread out over 16 Hotel or Mixed Use developments.
So What About Condos?
Unfortunately, it doesn’t seem like Downtown San Diego will be seeing any new condos for the time being. There are 5 projects on the city’s list that include condos, but some of those projects seem to be falling apart. There are currently a total of 779 proposed condo units, but the largest project on the list is the California Theater which makes up 336 of the 779 condos. It was recently announced that the Australian Developer Caydon collapsed and is liquidating their assets. In addition to 336 condo units, the California Theater project also planned to incorporate 190 hotel rooms.
It was also recently announced that the city is pulling the plug on the Ritz Carlton Development between 7th/8th on Market. This project was going to have 59 Ritz Carlton branded condo units. While it doesn’t appear to be completely ruled out, it seems the developer is fighting an uphill battle with the City and will also need to incorporate 25% affordable housing units due to California’s “Surplus Land Act”.
Pinnacle Development has the second largest planned condominium project with 236 condo units. The lot is located on the south side of E street between 11th and Park. I personally believe it will be some time before that location can yield the prices needed to make a 41 story high rise viable.
It is disappointing, but I do not see any major condo projects happening in the near future. Downtown San Diego will likely continue to face issues with inventory. This becomes especially apparent when you consider the office space and potential job creation projected to hit Downtown over the next 2-3 years. Read more on the office/retail coming to Downtown below the charts.
Office and Retail
In addition to Apartments and Hotels, there is also a substantial amount of Office space and Retail planned. There is 2,304,000 sq ft of Office space under construction or recently completed! Majority of the office space is spread out across 2 projects, which are IQHQ’s RaDD and The Campus at Horton. I am not going over those projects in this article, but feel free to click the names in the previous sentence to read about those exciting projects.
Out of the 55 projects, 33 incorporate some sort of retail element. In my opinion, this is such an important part of giving the “neighborhood feel” to a city. In total, those projects have 948,000 sq ft of retail space. Again, the two largest contributors in this category are IQHQ’s RaDD and The Campus at Horton, which are both already under construction.
Overall, I am excited for these new additions to Downtown San Diego. I do feel like developers are building far to many apartment units, but a lot of that has to do with financing and feasibility. Condominium buildings are much harder to finance and they are much more risky. Developers typically front much of the cost to start the project and financing is much easier to obtain once they have a certain amount of units presold. I am hopefully that these office projects will lead to job creation in sectors like tech and life science. This would eventually lead to growing demand and make condo projects more feasible in the future.