The Downtown San Diego retail market is “hot and getting hotter,” according to a new report by the Burnham Urban Retail Group, with more than 1.1 million square feet of new space planned or under construction 64 percent of it located in the East Village near Petco Park.
Downtown retail inventory grew by 298,041 square feet during the 12-month period from June 30, 2004, to June 30, 2005, according to the report. While some 191,923 square feet is located in East Village, the balance is evenly distributed among the Little Italy, Gaslamp Quarter and Central Core neighborhoods.
“There is no question that the opening of Petco Park and the hundreds of new residential units and hotel rooms in the 26-block area surrounding it, have sparked a flurry of retail development to meet growing demand for restaurants, shops and services,” said Bill Shrader, senior vice president of the retail group. “Retail throughout Downtown overall is very strong, as the area continues to evolve into a synergistic live, work and play community.
“Most of the major new construction is located in the East Village, where more than $1.5 billion in redevelopment has either been completed or is in process, and another $1.4 billion in new residential, hotel and retail development is being planned.”
The Downtown San Diego vacancy rate increased slightly, from 7.1 percent to 7.8 percent, due to new inventory that hasn’t yet been occupied, as well as to negative net absorption of 52,142 square feet, said Shrader.
“This negative activity is attributed to the fact that existing retail tenants in older product that is being redeveloped have to vacate,” he said. “All of this negative absorption was recorded in markets like East Village, and the Central Core, where most of the new building activity is concentrated.”
Some neighborhood highlights:
– Inventory in the Marina District hasn’t changed since last year, still holding steady at 400,494 square feet, with 5.8 percent vacancy. An additional 138,000 square feet of new space is under way or planned, most of which is in the Seaport Village expansion and the rest located in the Pinnacle, a new condo tower.
– Little Italy saw the addition of just 24,600 square feet of new retail space since June 2004. Vacancy is 5.6 percent, down from 7.1 percent a year ago. There is 56,500 square feet of new space under construction or planned in several new condo projects.
– The Horton Plaza District is the largest retail neighborhood Downtown to date, with Horton Plaza’s mall the primary anchor. Vacancy is a low 1.9 percent, and there is no new space currently under construction or planned.
– The Gaslamp Quarter saw its existing inventory grow by 21,564 square feet to just over 945,000 square feet, ranking it as Downtown’s second largest retail market. Vacancy stands at 2.6 percent, with 65,000 square feet of new space coming on line in the next six to 12 months.
– East Village will see its retail inventory grow to more than 1.3 million square feet in the next 12 to 24 months, as 708,341 square feet of new space is added to current inventory.
– Cortez Hill has 127,704 square feet of existing inventory, with 8.9 percent vacancy, and an additional 9,500 square feet of space is planned in three residential projects.
– The Columbia District saw its vacancy fall from 6.6 percent as of June 30, 2004, to 2.6 percent as newly completed space has been occupied. An additional 82,000 square feet of retail space is planned in three residential and two office projects.
– The Central Core has 621,397 square feet of existing inventory, with an additional 30,000 square feet of space under construction in Vantage Pointe, and 10,000 square feet planned at 11th & B and Pacific Pointe, both condo projects.
