Petco Park may prove that diamonds are indeed a developer’s best friend if new projects around the ballpark end up paying off.
Prime among them is the $100 million DiamondView Tower, one of the first new Class A office buildings downtown in 15 years and one that boasts a coveted spot just beyond Petco Park’s right-field fence.
“People are big Padre fans, and the thought of having an office right next door and on top of the ballpark should be a positive notch for leasing office space,” said Jason Wood, director of development for project developer Cisterra Partners LLC of San Diego.
March 1 is the scheduled completion date for the 15-story, 305,000-square-foot-plus tower. Bounded by Ninth and 10th avenues and J and K streets in East Village, it includes 69,000 square feet of first- and second-floor retail space.
A major tenant that will be taking up the entire fourth and fifth floors of the tower is Cox Communications, which will be consolidating all of its local operations under one roof with its planned March move-in.
The studio will have a commanding view of the ballpark from its fourth-floor vantage point.
“It’s unbelievable,” said Jeff Fisher, vice president of Cox Media, now based in Hillcrest. “It’s the reason we’re moving down there. We are the Padres’ station. By putting together the three components, it will be a lot more efficient.”
Other tenants are It’s A Grind coffeehouse, Comerica Bank and CB Richard Ellis.
“The response from retailers has been very positive,” said Corinna Gattasso, associate vice president with Burnham Real Estate’s Urban Retail Group in downtown San Diego. “It’s a vibrant area and it’s exciting to get in now when there are still opportunities to get first-generation spaces.”
The tower should prove to be a hot ticket, once prospective tenants actually get to see the views, said Kraig Kristofferson, a downtown San Diego specialist with CB Richard Ellis.
“Those who are big baseball fans will be the first to be attracted,” he said. “The difficulty in pre-leasing the building is that, until people can get into it and see the views, it’s a little harder sale. Once it’s opened, it’s going to sell itself.”
Market Forces
With all of the dazzle that DiamondView Tower has been generating lately, is it likely to attract any new corporate headquarters downtown?
“I would love to think that would be the case,” said Kristofferson. “But we have little or no history of drawing national headquarters, mainly because of the cost of housing.”
The leasing rates at the DiamondView range from $3.25 to $4 a square foot, for spaces ranging from 1,000 to 33,000 square feet.
It’s been a long haul for Wood and his team, beginning in 2002, when the Padres decided not to develop the office component of the ballpark district. Cisterra purchased the rights to the site from the Padres for $12 million in October 2005.
Iconic Project
Another ballpark-inspired project now under way is the Icon, a $135 million mixed-use development on the block bounded by J and K streets, and 10th and 11th avenues in East Village.
The Icon will consist of 327 residences in four buildings, ranging from five to 24 floors. Its main draw is expected to be its skybox, a rooftop terrace overlooking Petco Park, and 820 feet away from home plate.
Among other Icon features are the 5th Inning lounge for community gatherings, an inner courtyard and a theater with tiered seating. About 16,000 square feet of commercial space will be located on the ground floor.
A development of Walnut Creek-based Levin Menzies & Associates LLC, the Icon offers a variety of floor plans, including five live/work units, ranging from 621 to 2,000 square feet, with prices from the low $400,000s to more than $1 million.
The project will be completed in 2007, with the first buildings expected to open in November. It is 85 percent sold.
Ebbs And Flows
Richard Garcia, development manager of the Icon, observed that the early birds , some of whom reserved their spaces as far back as 2003 , avoided the overheated real estate market that followed. Now, he said, things are returning to normal.
“We are back to 4 and 5 percent appreciations on an annual basis, which is sustainable and desirable, rather than the double-digit appreciation rates we had,” said Garcia.
The presumed glut of residential units in San Diego will not impact marquee projects like the Icon, he said.
While the ballpark is a definite draw, it’s not the only magnet pulling folks to the Icon, said Garcia.
“I think it’s a primary attraction for 10 or 15 percent of our demographics , hard-core baseball fans who want to be close to the action,” he observed. “But the bulk of buyers recognize that the ballpark district is a very exciting place to be, and is quickly being surrounded by high-quality projects , major investments.”
The Right Mix
Grubb & Ellis’ Linville Martin, who is handling the commercial leasing of the Icon, said that nailing down retailers is a lot tougher than attracting residential buyers , especially in light of the competing projects in the ballpark area.
“They hesitate and say, ‘Why don’t we wait? Maybe we ought to consider all the options,’ ” Martin said.
But after the usual holiday lull, Martin said he expects retail interest to pick up, spurred by a serious lack of what he calls “neighborhood-serving retail” downtown.
“If we’re not careful, we will not have enough retail, and become another suburb,” said Martin.
Live And Work
Hans Strom, principal of Strom Commercial Real Estate in San Diego, said that he has reservations for three of the five live/work units at the Icon , a jewelry store, a shop specializing in women’s handbags and a tax accountant, who now works in the Gaslamp Quarter , all of them independent operators.
The prices range from $627,000 to $943,000, with spaces ranging from 965 to 1,451 square feet.
“It’s a tougher market than a year ago,” Strom observed. “There aren’t any speculative investors out there now, or these would have been snatched up early.”
