The Balpark District Redevelopment project represents the last and perhaps most important phase in the revitalization of Downtown San Diego. This revitalization program consists of more than $1 billion in private residential, hotel, office and retail development. The Ballpark Village is the parcel of property of “superblocks” on the south side of the ballpark. This property was agreed upon to have land use flexibility potentially creating a “City within an City” with $3.1 million square feet of construction that could include over six towers on the 7.1 acre site.

The history of the development of these parcels dates back to the 1998 Memorandum of Understanding (MofU) between The City of San Diego, CCDC, The Padres, and JMI; and the election of Prop. C., allowing contracting out of city services. JMI Realty was appointed by the City of San Diego and the San Diego Padres, Master Developer for the Ballpark District. The MofU requires JMI to contribute $311 Million in “ancillary development” tpo the 26 block East Village Ballpark District.

The MofU outlines infrastructure developments such as:

• Park at the Park
• The Pedestrian Bridge
• Park to the Bay Link
• Land Use Flexibility
• Preservation of View Corricdors
• Emphasis on Higher Density Development

JMI has been working with Marriot Hotels to build on the western-most parcel of the development. The hotel plan and design is headed by architect Johmson Fain. The plans were proposed to the public forum for debate. Design is still pending CCDCs approval. The hotel plan includes 2500 foot towers; a 110 foot promenade structure supporting the perimeter of the towers providing 1.5 acres of top floor usable outside space; outside cafes and street level retail; landing of the Pedestrian Bridge on the East Village side; extension of the MLK Promenade; and neighborhood ascetic upgrades. If approved, the construction would be slated to begin in 2009 with a completion date of 2012.

What would be the benefits of this hotel?

1. Tansitory Occupancy Tax revenues of $15 million plus yearly
2. $7 million dollar Tax Basis yearly
3. Capacity of Convention Center increased with no public dollars. This would ensure that SD could continue to host growing conventions like ComicCon whose contract is up in 2012
4. Project would be LEED Certified. Not green, but a focus on Leadership and Energy Design
5. Facilitate completion of the Pedestrian Bridge
6. 2400 construction jobs
7. 2600 permanent hotel and hospitality jobs
8. Revitalization of the southern East Village
9. Provide more patrons for local infrastructure to survive
10. Diversify the use of outdoor and indoor public space available to the East Village residents and hotel visitors

Most comments seemed in favor of the hotel development, and most of the public that stayed to comment thanked JMI for the open forum and public presentation of plans. The oppostion to the development centered around the following issues:

• 10th avenue corridor view blocked by 110 ft. promenade structure
• Overall Tower Design could be better. Design could give San Diego Skyline more of a “wow” development
• Flow of traffic, both vehicular, pedestrian and cargo need to be examined more closely
• Development should offer more to “locals” in terms of infrastructure. The local neighborhood bears the weight of the development, but does not see a great amount of direct monetary benefit from the TOT or the Yearly Property Tax which get put into a general fund, rather than East Village funding.

This designation charged JMI Realty with the formidable task of revitalizing the once blighted and disregarded eastern edge of Downtown San Diego into a vibrant, year-round sports and entertainment destination as well as a livable, comfortable urban neighbored for San Diego’s residents and visitors alike.

Written By Pete Thistle w/ 92101 Urban Living

Title: Q1 2008 Buying Trends nosing up in Downtown San Diego

A little more than a week ago, I was walking down 10th Ave behind an overconfident baseball fan of the visiting team at Petco Park. They pointed to a FOR SALE sign and commented on how San Diego was a distressed and struggling real estate market. “These sellers would probably take ANY offer,” one of them said. “I’m going to wait until the end of the year when people are really desperate. No one is buying anything here right now.”

This might be the best example of deductive reasoning I have seen in a long time. While many areas of the nation are facing the housing “crisis” that CNN and the Today Show readily report on, it doesn’t necessarily mean that all areas of the nation are in crisis.

Buyers are out there in the downtown 92101 area…and they are buying! The Q1 2008 sales data found in the paragraphs below supports this notion and suggests that there are not as many fence-sitters timing the market as the occasional downtown visitor may think.

92101 SALES DATA FOR Q1 2008
On Thursday April 10th, 2008, Market Pointe Realty Advisor’s President and CEO Russ Valone presented a very well organized compilation of 92101 sales, inventory and pricing data to a large group of downtown realtors at the weekly caravan. In his 14-page PowerPoint presentation, Russ indicated that the number of condo re-sales in 92101 alone (excluding new condo sales) rose to a total of 38 condos during the month of March 2008. That’s up 23% from February’s 31 re-sales and 12% to 15% up from December and January’s numbers of 34 and 33 re-sales respectively.

BUT…Aren’t those early winter months the slowest of the year by comparison?

Not so according to a statistical analysis of re-sales in 92101 from January 2007 through March 2008. Of the 572 re-sales sold during this timeframe, the 15-month 92101 average re-sale activity is 38.13 homes per month!

Even the infamous “days-on-market” average for downtown 92101 is on its way down from an eight-year quarterly high of 92 days to just 71 days in Q1 2008!

BUT…What about those new condo sales, you ask?

The inventory of new condos that are still for sale is diminishing at a far greater pace than that which was predicted two years ago. New condo sales (i.e. the sales in which new condo owners actually closed escrow) were up in March 2008 to their highest point of 34 since June 2007! This kind of sales activity defies the most recent 15-month average of 29.53 new condo sales closed per month. I guess not as many buyers have backed out of their advance condo purchase as some may have speculated.

BUT…Can’t statistical sales averages be manipulated to say just about anything?

The numbers don’t lie in favor of these arguments. The 15-month average of 29.53 new condo sales per month was weighted by months like February 2007 when a whopping 82 new condo sales closed escrow during the opening of the 327-unit ICON community and the 179-unit Alta community. In today’s market, where far fewer new condos will be closing sales in 2008, 34 new condo sales closing escrow in March 2008 is simply rockin’!
BUT… What about those suffering prices per square foot? Isn’t that indicative of a struggling market?

Check out Chad’s blog, Pricing Trends in Downtown San Diego, for more information on how the price per square foot has been positively affected.

BUT… What about all of those “short sales” and bank owned properties commonly referred to as REO’s?

Check out Mike’s blog, Myth 2: re. Flood of inventory into the downtown market, for more information on 92101’s distressed sales market.

So no one is buying downtown and both sellers and developers are desperate out there?

Yeah, right.

What’s your theory? Is there still time in 2008 for buyers to “time the market?” Has the big plunge in pricing or the proverbial “bottom” that some seem to be waiting for already happened? Everyone has their theory- some are statistical, some use deductive reasoning, and others just have a hunch.

Share your theory with us by hitting reply to publicly post to this blog or send it to me, Pete Thistle, at pete@92101urbanliving.com.

MYTH # 2: There is a glut of inventory in Downtown San Diego. Sellers, Developers, and Banks are panic selling.

Not a day goes by in this real estate business that either a past client or current buyer asks me to elaborate on the “state of the market”, and in what direction things are headed. This is always the “trick” question, because none of us really have our crystal balls. If I had had one of those, I definitely would not have stayed up until 1:30 in the morning last night to watch the Padres loose to the Rockies in the longest game of Petco history…22 Innings! Here I digress…back to the “State of the Market” which ultimately comes down to Real Estate/Econ 101 and that fantastic invention…the supply demand curve. This is the point where current levels of Downtown San Diego inventory and the “public perception” (I.E. Myth #2) come into play.

In the case of inventory I tell my clients to never believe an article that speaks of “doom and gloom”, and then never give any hard numbers to consider (Union Tribune articles?). With that said, obviously the numbers never lie. It is not my job to sell anyone on a “glut” or not. I do not need to sell headlines, so I trust that after presenting the facts, you will ultimately be savvy enough to make up your own minds.

Before we get into the hard facts, let’s pull back and put some perspective and context on what has actually happened in Downtown San Diego relative to inventory levels since the beginning of 2007 until now…2nd Quarter of 2008. Last year we saw the delivery of over 1,892 new units to the overall inventory of Downtown San Diego homes. This was not only the largest push of inventory to Downtown ever, but in case anyone is paying attention; that is over 17% of the total inventory in all of Downtown (Currently @ 88 projects and 10,926 homes). This push also coincided with the decline of the subprime and financing markets. It is important to consider the historical perspective, because it caused the Real Estate Inventory to be separated into three distinct categories that still exist today: Resale Market, Developer Owned Sales, and the Distressed Market. This is so critical to understand, because inventory is given in total numbers even though each market has its own story, and its own sale statistics.

So finally the numbers: According to SDLOOKUP.com and Market Pointe Realty Advisors
• Resale Inventory is 601 homes or 5.5% of total inventory.
• Distressed Inventory is 83 homes or .76% of total inventory. (For obvious reasons, I have chosen to exclude Short Sales and Pre-Foreclosures b/c of their unknown timing and outcome)
• Developer Owned Unit Inventory is 743 new homes or 6.8% of total inventory. (This number excludes 707 units under construction, because full delivery is not until Spring of 2010)

Figure 1.0

Ok…if you are with me thus far, it means that we have covered the supply part of the equation. In order to examine demand, it is again beneficial to take a look at the historical figures leading up to last year’s statistics and the first Quarter of 08. For this task, let’s take a look at a couple of graphs. In Figure 1.0, you will see yearly numbers of resale home closings in 92101. Aside from the incredible numbers of 2005(the time when flipping was alive and well Downtown), 2007 looks very similar to 2003, 2004, and 2006.

Figure 2.0

In Figure 2.0, we see the Downtown new-home historical sales statistics. Yes, there is a significant drop from 2006 to 2007 because flipping and speculation came to a screeching halt. Investors were no longer buying from developers and sales offices only to turn around and put the same unit on the resale market for a higher price. This was a very significant change, because it started to strengthen the integrity of investments Downtown. We would no longer have speculators driving up the costs of homes unnecessarily, we now have a new generation of “long term” urban homeowners who would be buying into and supporting the infrastructure of Downtown and its’ specific neighborhoods.

Now that we are able to see both supply and demand sides, the QUESTION becomes: When will we see a shift in the supply demand curve?

ANSWER: As developer units deplete, a buyer will have less to choose from, and have to go to the resale market exclusively for their choices. New construction and developer units will continue to have some of the best deals in the Downtown market until the middle/end of summer 08. By this time (as it is already starting to happen) the availability of developer units in certain price ranges will be completely picked over or sold out. As this starts to happen, the resale market strengthens, because it no longer has to compete with the healthy developer incentives to make a sale. This will continue to happen for the next 2 years as there will be very little new inventory delivered (only 707 units), and only those people who ultimately have to sell will choose to enter the market. All information indicates that the distressed market will continue to get worse before it gets better. In the lower price ranges, this market will continue to generate good deals. But, overall the distressed market will not drive inventory, as over 90% of the foreclosures in Downtown are under $500k!

Myth #3: We haven’t reached the bottom yet, the best pricing is yet to come…

Hi Sports fans! Here is some news to stoke the conversation around the water cooler. Does anyone stand around a water cooler anymore? I saw an episode of The Office where Dwight moved the water cooler to be right next to his desk so he could get in on what’s going down. Well, you don’t have to be next to Mr. Schrute or a water cooler. I’m gonna tell you about some numbers I have seen thanks to the good folks at Market Pointe Realty Advisors regarding Downtown San Diego real estate.

Let us begin with resale numbers. The average price of a home in downtown San Diego actually went up. This is the price tag on the home at close of escrow. In 2007 it was $654,706 and this year it is $673,361. However, there is great news about that- the square footage is up from 1,165 in 2007 to 1,206 in 2008. So that means the price per square foot went down. You can see these aren’t drastic changes. It’s dipped $4 a square foot from 2007 to 2008. As opposed to the $49 per square foot dip that happened from 2006 to 2007. It looks like we are bottoming!

Now on to the New Home market. Much more of a drastic increase/decrease in the three categories. The average price for a new home shot up from $569,261 to $640,619 from 2007 to 2008. BUT, the square footage went from 947 square feet to 1,089. That’s 142 square feet! You were basically getting another room in the house. The price per square foot went from $601.37 down to $588.05. Overall in 2007 (Q1-Q4) price per square foot went from an average of $739.91 down to $601.37. If you bought new construction at the end of 2007 then congratulations!

So there you have it. The hard cold numbers. They have no soul, don’t rely on emotion or “what if”. They just are. You’ve seen it, you cannot unsee it.

Back in February, we posted a blog and article on the problems facing the development of the Harbor Drive Pedestrian Bridge. At that point the original $12.8 million budget became an unrealistic low ball number as the budget swelled to over $30 million. The city of San Diego was then faced with the option of returning to the drawing board and coming up with a more ordinary design. Well, the city essentially wasn’t looking for ordinary, and decided to solider ahead with the proposed eye-catching suspension bridge, with a little help from some friends, so-to-say.

The Harbor Drive Pedestrian Bridge will not only create a visual icon, but will provide pedestrians with safe passage from Park Boulevard to the Convention Center without encountering car and train traffic. This project will complete a 100-year old vision of a Park-to-the-Bay link, connecting San Diego’s two most important regional assest: Balboa Park and the San Diego Bay. The bridge will improve traffic circulation and access to and from the waterfront and Barrio Logan as well as connecting the 2,000-space Port of San Diego parking garage with Park Boulevard. Located next to PETCO Park, home of the San Diego Padres, the bridge will safely connect stadium visitors to the other side of Harbor Drive and the Bay. The bridge will include pedestrian barriers and enhanced safety crossing technologies.

So, here’s the latest updates…

As we know, the orginal 12.8 million budget was not enough. Finding a contractor who would even touch this project was a challenge for the city. Contractors hesitated due to all the Federal ‘red tape’ that goes with building over train tracks, but eventually the city was deciding between two. One with a bid right under $30 million, and one coming with a bid right over the $30 million mark. The Centre City Development Corporation (CCDC) accepted the loweat bid at approximately $29 million. With $3 million already spent on design and architecture costs, the total budget now reaches $32 million.

So where is this money coming from? Here’s the list of people to thank:

• $4.9 million to bridge construction and the landing at the Ballpark end from JMI Realty (a private real estate investment and development company) and the CCDC
• $2 million in Smart Grants
• $2.8 million from Federal Transportation
• $8 million in State Grants
• The remaining $12 million from the CCDC

There were a few concerns expressed by the public and officials regarding who will be responsible for the landing at the Convention Center dealing with all the pedestrain and accessibility issues; the Convention Center? The Port of San Diego? The Hilton?

The approval process takes awhile, but they are hoping to commence on the 13th of May. The project is projected to take 15-18 months and should be done sometime late next year.

If you live in downtown San Diego, from Little Italy, to the East Village, to the Marina District, the sound of passenger and freight train blarring their horn is probably ingrained in your head. Now this is for safety reasons, which is certainly understandable. The city of San Diego however, has implemented a plan to prevent trains from blowing that jolting horn, and maintaining a safe passage for pedestrians and vehicles.

The San Diego Quiet Zone is in the design phase, thus the date of finalization has not been set yet. Proper enviornmental review and and a public and City ordinance process to convert G Street to a one-way street has been completed.

The San Diego Quiet Zone plan will impliment safety enhancements to the 13 railroad crossings in the downtown area. Once these safety enhancements are completed, downtown SanDiego will then qualify for a federal Quiet Zone designation, in which trains do not have to routinely blow their horns through rail crossings.

The new Thomas Jefferson School of Law is relocating from Old Town to downtown San Diego’s East Village. The new site will be located on Island Avenue between 11th Avenue and Park Boulevard. The Thomas Jefferson School of Law is a non-profit post secondary law school, and is nationally well known. The building itselff will be eight-stories with massive terraces on the 5th and 8th levels. The school will house classrooms, a library, admissions, administrative, staff and student departments, faculty offices, and student and faculty louges. There will also be suitable pedestrian access to the Law Schools lobby, the public Law Clinic, cafe and bookstore.

San Diego’s new Children’s Museum is located on the north side of Island Avenue between Front and Union streets (at the former museums site) in downtowns vibrant Marina District. The primary entrance of the Museum is on the south end which is surrounded by the beautifully landscaped Children’s Park. Construction of this project began in early 2006 and is due to open next month (May 4th!). This new museum is approximately 50,000 square feet and 3 stories high. “Like the art-oriented children’s activities within, the architecture seeks to engage and educate the users,” says designer/architects Rob Wellington Quigley.
The new Children’s Museum utilizes “green” architectural and infrastructure practices, including recycled building materials, photovoltaic panels, water-saving devices, natural daylighting and convection cooling. This will be one of the first ‘green’ museums in California.
The new building will include 13,000 square feet of galleries, retail store, public lobby, a cafe with exterior terraces, plenty of activity areas, ans a 25,000-square-foot multipurpose performance center. The Museum will also be housing a 6,000 square foot Charter School for grades 3rd through 6th.

The Metro Center will be a commerical shopping center located on the 6.5 acre site bounded by 16th and Commercial streets and National and Newton avenues. This project site is an enormous vacant space that was formerly a UNOCAL tank storage yard and currently houses two MTS warehouses on the norhtern end of the lot. Soil remediation has already been completed, and developers are in negotiations with MTS for the purchase of these sites. This site is currently the largest single undeveloped property in all of downtown San Diego.

The Metro Center 5 story commercial project includes 475,946 square feet of multi-level, muti-tenant retail and commerical space. This will include two ‘big box’retailers, a home improvement center on the ground floor and another large retailer (Rumored to be a Target) on the 2nd floor, with a variety of other retail tenants on floors 1-5. This project will also contain elevated and subterranean parking with 1,368 parking spaces.

As more and more people move out of suburban sprawls and into diversified cities, developers are challanged, attempting to bring large scale retail into urban enviorments. As most structures in urban areas, they grow vertically. It seems like the developers and architects have successfully integrated this large retail complex into the urban fabric, providing an interesting and attractive center that interfaces and interacts with the surrounding neighborhood. The project’s central location provides convienent citywide access from public transportation, minimizing dependance on arrival by car.
For more information check out the CCDC meeting information.

San Diego is a city that is still gaining it’s idenity. It’s not that SanDiego isn’t defined… It is known for the great weather, gorgeous waterfront location, Balboa Park, Petco Park, the Navy and more; what I’m saying is there is room amongst all the new development to make your mark, to have a say in the overall direction that downtown will head in the future. Want to have a say? Be informed about what’s going on. A great way to do this is attending CCDC meetings. What is CCDC?

‘CCDC is the public, non-profit corporation created by the City of San Diego to staff and implement Downtown redevelopment projects and programs. Formed in 1975, the corporation serves on behalf of the San Diego Redevelopment Agency as the catalyst for public-private partnerships to facilitate redevelopment projects adopted pursuant to redevelopment law. Through an operating agreement, CCDC is the Agency’s representative in the development of retail, residential, office, hotel, cultural and educational projects and public improvement projects.’

Here are some meetings/events going on this month…

Downtown Design Guidelines

Tuesday, April 8th: 6:30pm-8:30pm

Hosted at San Diego Concourse- Silver Hall

Event Details:

‘CCDC has recently commenced work on the Downtown Design Guidelines, which are intended to further the work guided by the Downtown Community Plan. The goal is to establish a design vocabulary comprising the essential elements for realizing downtown’s full potential as a vibrant, mixed-use urban center. Join this community meeting and learn morte about the development process for the Downtown Design Guidelines.’

• RSVP @ events@ccdc.com

San Diego Marriot Hotel at Ballpark Village Public Meeting
Monday 04/14/2008: 6:00pm-8:00pm

Hosted at the Omni Hotel _ Gallery Meeting Room I

Event Details
The Centre City Development Corporation and JMI Realty invite you to a community discussion regarding the proposed San Diego Marriot Hotel at Ballpark Village project planned for the East Village.

Discussion topics will include:

• Background of Ballpark Village Master Plan
• Project design and conceptual renderings
• Environmental studies
• Vehicular and pedestrian circulation
• Entitlement and design review status, process and schedule
• Pedestrian Bridge update

For more Event and meeting information visit CCDCs website.

*All information from CCDC.com*