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Monday, Jun 24, 2024

Builders Get a Fresh Look at Downtown Retail Opportunities

A study scheduled for release this week may give Downtown San Diego developers an inside track when it comes to retail opportunities in some of the area’s booming neighborhoods.

The study, which is expected to be issued publicly Dec. 15, was commissioned by the Downtown San Diego Partnership using $30,000 in city and county funds and examines the purchasing behavior of various segments of the area’s residential and commuter populations. It is the first study of its kind in San Diego and could serve as a ground level road map for future projects, according to Kevin Casey, director of public affairs for the nonprofit partnership, which was formed in 1993 with the merger of the San Diego Downtown/Central City Association and San Diegans, Inc.

“The reason we made the study is because we weren’t sure we were getting as diverse a retail community as we could Downtown,” Casey said. “We think the information we’re going to get out of this report is going to be very useful.”

Doug Wilson, owner of Douglas Wilson Cos., which is in the midst of developing a mixed-use project on Market Street that will include nearly 10,000 square feet of retail space, said that he doesn’t expect anything revolutionary to come out of the study, but he does believe it will validate some of the construction under way Downtown.

“Right now, the challenge is future development, because costs are up,” Wilson said. “The reality is, things are slowing.”

Wilson said his Market Street project is a good 16 months away from completion, so no retail tenant agreements have been made. Wilson will, however, be interested to see what the study suggests for that neighborhood.

The specific Downtown neighborhoods examined in the study include Harbor View, Little Italy, Cortez, the Marina, East Village, the Gaslamp Quarter and the “core-Columbia” area.

Among the early highlights released from the study this month is the profiling of 66 different types of customer segments in Downtown. Those segments include the “urban achievers,” the “young digeratis,” and the “urban elders.” Each segment comes with its own unique purchasing history, media use habits and overall consumer lifestyle.

Research for the study was gathered from more than 100 sources, including information provided directly from the Downtown leaders, credit card reports, magazine subscription records and statistics gathered via grocery store club cards.

Matt Montgomery, the executive director of the Western region for Buxton CommunityID, the Fort Worth, Texas-based firm that conducted the study, said San Diego is the first top 10 metropolitan market in the United States to request a study of this kind.

There is a large population of urban achievers in Little Italy, Montgomery said. They are defined as high-end consumers with habits that include a fondness for Heineken beer, shopping trips to Banana Republic, subscriptions to fitness magazines, frequent trips to the movies and they tend to have a foreign connection, whether they are immigrants themselves or come from recently immigrated families.

Unlike urban achievers, the segment called urban elders typically includes lower end consumers who like to shop by mail; young digeratis are primarily young singles and couples who watch HBO and frequently eat in restaurants, Montgomery said.

All this information on consumers can be used to play a “matchmaking dating game” with developers and prospective retail tenants, Montgomery said.

Although officials at the Downtown San Diego Partnership are optimistic about how useful the retail study will be, others are cautiously waiting to see if the study, which has been under way since early spring, will deliver real results or sit idle on a shelf collecting dust in a matter of months.

“I think in general it’s a good report because it helps to validate that there’s a growing retail market in Downtown,” said Bill Shrader, senior vice president of Burnham Real Estate’s Urban Retail Group. “What I’m wrestling with is how is this going to be applicable to specific developments.”

Shrader said he’s worried the study may recommend to a developer to seek out a high-end coffee shop to fill an ideal corner space without recognizing that a Starbucks or a Coffee Bean already opened just one block away. The competition factor isn’t his only concern. Shrader also said specific developments have specific needs in terms of what type of feel and look that they are designed to have and there may be conflicts if the study recommends one type of retailer when it’s not in keeping with what the development is designed for.

Another issue with Downtown retail development is the debate about balancing high-profile retail chain stores, such as Starbucks and Borders Books, with smaller mom-and-pop shops that add character to an urban environment.

“That’s one of the things that we’re trying to come to terms with but there’s still a lot of opportunity,” said Casey from the Downtown San Diego Partnership.

Casey also said that although the study hinges more on the large, brand name stores, smaller mom-and-pops could still benefit from it because they can still operate the same types of stores without the corporate name.

Shrader said it’s possible mom-and-pops may actually have a slight advantage because they can see the study and possibly open a business faster than the larger corporations that have more lengthy procedures to go through internally before they launch new stores.


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