San Diego Business Journal

To the surprise of few people, the controversial One Paseo mixed-use development in Carmel Valley could now be heading toward the city ballot box in San Diego.

Opponents of Kilroy Realty Corp.’s $750 million project recently started a signature-gathering campaign, aimed at repealing the San Diego City Council’s recent 7-2 approval of the project or placing the issue before city voters. Organizers, led by a coalition known as What Price Main Street?, have until March 25 to collect at least 34,000 voter signatures.

If sufficient signatures are verified, the City Council could either vote to repeal the approval or place the matter on a future election ballot, possibly in 2016.

“The City Council’s vote for One Paseo flies in the face of good planning and what makes sense for our neighborhoods,” said Ken Farinsky, a leader of What Price Main Street?, in a statement. “If not overturned, this vote could bring similar oversized developments to neighborhoods throughout San Diego.”

In its response to the referendum drive, Los Angeles-based Kilroy said the move to overturn the council’s decision will serve to “block thousands of new jobs and affordable housing in the most sustainable project ever to be proposed in San Diego.”

“The opponents of One Paseo made their case against the project for many months, and it was full of falsehoods and unsupported opinions and fears,” Kilroy spokeswoman Rachel Laing said in a statement. “The City Council members met with these opponents repeatedly and listened to their concerns and vetted them against the environmental impact report and strong factual support of technical experts and city staff.”

Opponents cited potential traffic headaches and other issues that could arise from the 1.4 million-square-foot project, planned for a 23.6-acre site and including 10 buildings with office and retail space and 608 condos and apartments.

Before the start of the signature drive, Kilroy was aiming to start construction before year’s end, with the first spaces available to occupy in 2018. But considering San Diego’s recent history of disputed projects, several of which have landed in courts or before voters during the past decade, it would have been shocking if One Paseo proceeded unscathed at this point.

In addition to dozens of residents from Carmel Valley and adjacent city neighborhoods who spoke against One Paseo at a seven-hour session of the City Council, there were also opponents from the city councils of Del Mar and Solana Beach, as well as the Solana Beach school board.

Both Kilroy and project opponent Donahue Schriber of Costa Mesa — which owns the Del Mar Highlands Town Center retail property across the street from the One Paseo site — are known to have spent more than $1 million garnering public support/opposition to the project, including gathering unofficial signature petitions presented to city officials prior to last month’s council decision.

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San Diego Places 8th Among U.S. Office Markets: San Diego ranks eighth among major U.S. cities in the latest annual ranking of the nation’s strongest office property markets by the brokerage company Marcus & Millichap Inc.

The local region ranked seventh in last year’s ranking of the nation’s 46 largest metro markets, which is intended as a guide for nationwide office property investors. Researchers base the ranking on various supply-and-demand variables, including job and rent growth, new construction and vacancy rates.

Marcus & Millichap’s report said the San Diego office market is expected to “take another step forward” in 2015 as hiring remains on track and “the threat of new supply is limited.” Researchers said office-using payrolls will surpass pre-recession levels in the first half of the year, and space demand began 2015 nearly 9 percent above the prior pre-recession peak.

“As office users expand or move into the metro to create synergies with the biotechnology industry, vacancy will dip below the pre-recession low by the end of 2015,” the report said, forecasting the local vacancy rate at 13 percent by year’s end as asking rents rise 4.6 percent over 2014.

The top five markets in this year’s ranking were San Francisco, San Jose, Seattle-Tacoma, New York City and Orange County.

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Another Downtown Apartment Project OK’d: Developer The Richman Group of California LLC, based in La Jolla, recently received approval from Civic San Diego for F11, a seven-story, mixed-use development with luxury apartments and retail, planned for an East Village site at F Street between 11th Avenue and Park Boulevard.

Company officials said Richman Group in the past six months has received government agency approvals on three multifamily mixed-use projects in Los Angeles, Orange and now San Diego counties, with a total of 326 apartments and a combined value of $150 million. Developers said the San Diego project’s cost is between $45 million and $50 million.

The San Diego project is set to begin construction in the first quarter of 2016, with completion 18 months later. Developers said the project, adjacent to East Village’s I.D.E.A. District, includes 99 apartments, 5,644 square feet of street-level retail and related commercial space, exercise facilities and recreational amenities including a bowling alley.

The design features a U-shaped building surrounding a south-facing courtyard and pool area. Richman Group of California is partnering with longtime property owner Shearn H. Platt, a subsidiary of The Richman Group Development Corp.

According to its website, both Richman Group entities are part of Connecticut-headquartered The Richman Group of Cos.

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New Tenants Arriving at La Jolla Retail Center: San Diego-based owner Davlyn Investments has announced several tenants for its recently renovated La Plaza La Jolla, an open-air retail center at 7863 Girard Ave. with an official reopening set for March 16.

The roster now includes Beaming, which sells items including organic “superfoods,” and the restaurant Catania, a new Italian coastal culinary concept by locally based Whisknladle Hospitality that has 180-degree ocean views.

Also opening at the center is Elixir Espresso & Wine Bar, which has three other existing locations in the San Diego area, and La Jolla-based Lissilaa Boutique is expanding its fashion offerings with a 560-square-foot shoe boutique called La Scarpa-Italian.

Operators said the center, which Davlyn acquired in 2012, has been completely renovated and rebuilt into a three-story, 27,000-square-foot open-air center featuring Spanish and Moroccan design elements.

Send commercial real estate and development news of general local interest to Lou Hirsh via email at lhirsh@sdbj.com. He can be reached at 858-277-8904.