San Diego Business Journal

— Downtown property owners may need to step up efforts to provide creative office space and other work-life amenities favored by the fast-growing and increasingly influential group known as millennials, based on recent demographic findings by the Downtown San Diego Partnership and University of California, San Diego.

Partnership President and CEO Kris Michell said the nonprofit business advocacy group commissioned a study to determine how the 18-to-34 demographic will influence what has already been projected as an overall doubling of downtown’s current residential population by the year 2050, when it is expected to reach nearly 61,611.

“The downtown property owners are very creative, but we need more projects like the kind that are preferred by millennials,” Michell said.

While qualitative data will follow in 2016 — i.e., proposals for promoting changes — Michell said the quantitative evidence suggests that property owners and developers may need to accelerate the transition to highly amenitized office buildings with lifestyle features that allow collaboration and access to fresh air and sunlight, exercise, recreation and healthy eating. The priority for that group is a better work-life balance not always available in older offices built around cubicles.

Michell noted that there are already several current and effective examples to emulate downtown, including business incubator and accelerator spaces at high-rises owned by Irvine Co., and alternative shared-workspace arrangements offered by providers such as Co-Merge Workplace.

Need for Amenities

Currently, millennials account for 42 percent of downtown’s population and 27 percent of San Diego County’s population. In 2020, that 18-to-34 group will be 34 percent of downtown’s population and 26 percent of the county’s population.

Because that age group tends to put off buying homes, Michell said millennials who live downtown also expect a higher level of amenities in their living spaces, with pedestrian-friendly access to neighboring social gathering and dining spots. Increasingly, retired and near-retired baby boomers are also demanding the same features as they also move to downtown and downsize their living arrangements.

Lifestyle expectations are generally higher for the downtown population as a whole, which was found to have higher average income, and higher education levels than the overall local population. The average household income downtown is $73,756, compared with $59,414 for the county. And 51 percent of downtown residents have attained a bachelor’s degree or higher, compared with 34.6 percent for county residents overall.

High-density development with pedestrian-friendly amenities, researchers noted, is most appropriate for places such as downtown San Diego, which by population is roughly nine times as dense as San Diego County as a whole — 6,211 residents per square mile vs. 725 per square mile for the region.

A demographic study and “dashboard” were created for the partnership by UC San Diego’s Center for Research on the Regional Economy.

Drawing Startups

Josh Shapiro, a director of research and evaluation at UC San Diego Extension who worked on the downtown study, said a key difference between downtown San Diego and the urban cores of many similar-sized U.S. cities is the number of startup business operators choosing to locate in the local downtown.

He said the clustering of millennial-age entrepreneurs and their employees will prove to be a major economic development tool for downtown San Diego over the next decade and beyond.

“This trend signifies the importance of not just price per square foot, but also the desire to connect with other young, smart entrepreneurs who value social and cultural amenities,” Shapiro said.

While keeping pace with demographic shifts to attract the workplace talent that drives economic development, the researcher said downtown also will need to create housing to accommodate demand, while maintaining open space, bike paths and other iconic cultural amenities. “Density demands better planning and design to create livable and vibrant neighborhoods,” Shapiro said.

Keeping It Moving

Michell said the partnership and other local agencies are continuing to work on ways to make the downtown walk friendly, and also make traffic circulate more efficiently. An upcoming downtown circulator program, for instance, will make use of electric cartlike vehicles that can be hailed by riders on demand via mobile apps, similar to what is already being done with rideshare services such as Uber and Lyft.

As millennials decide to raise children downtown, she said efforts may need to be made to boost the presence of quality schools, adding to current charter offerings that include Urban Discovery Academy and E3 Civic High School.

The demographic study focused primarily on seven districts officially classified as downtown by the city — Little Italy, Cortez, Civic Center, Columbia, East Village, the Marina district and the Gaslamp Quarter. Those neighborhoods span a total of 332 city blocks and approximately 4 square miles.