An improving economy is spurring new progress on long-discussed development projects in places like Carlsbad, where work is proceeding on a large retail center and adjacent new homes on an 83-acre site known as La Costa Town Square.
“This project is about 40 years in the making,” said Bill Davidson, owner and CEO of Davidson Communities, whose Del Mar company recently purchased 63 residential lots spanning 24 acres at the development for $14.1 million.
Davidson said grading has begun at the site, with the first phase of single-family homes likely to be ready for sale before the end of 2013 and the rest to be built out by the end of 2015. The seller in the land deal was Property Development Centers LLC, also known as PDC, the real estate arm of Pleasanton-based grocer Safeway Inc., which has begun work on an upscale 285,000-square-foot shopping center to serve La Costa and surrounding neighborhoods.
Steve Avoyer, president of Flocke & Avoyer, which is overseeing retail leasing at La Costa Town Square for PDC, said talks are ongoing to fill 30 to 40 tenant slots at the center, set for a 2014 opening and expected to be anchored by Safeway’s Vons supermarket. Tenant announcements could be forthcoming after the first of the year, as operators field inquiries from national and local retailers, restaurant operators, financial institutions and service businesses.
Opportunity for Tenants
Avoyer, whose San Diego company oversees leasing and operations at more than 100 local centers with an overall vacancy around 5 percent, said numerous candidates have expressed interest in locating at the new La Costa center. Retail construction remains rare in San Diego County, because of barriers to entry such as limited land availability and stringent development requirements in several communities, especially those in coastal-adjacent areas.
“It’s those high-barrier markets where things are tight and lots of tenants are looking to get in,” Avoyer said.
La Costa Town Square is intended to serve an area not far from the posh La Costa Resort & Spa, where PDC plans to serve a population of approximately 157,000 within a five-mile radius. The developer says that area has a median household income of $97,930 in a five-mile radius, which rises to $122,580 in a one-mile radius of the site, near the intersection of Rancho Santa Fe Road and La Costa Avenue.
“This is probably one of the last places in La Costa that’s going to be available for a project like this,” said David Santistevan, senior vice president in the San Diego office of Colliers International, among the brokers representing Property Development Centers in the land sale to Davidson.
Other developers have recently proposed or moved forward with retail projects serving the Carlsbad market, buoyed by recent upticks in home construction, retail spending and consumer confidence. Those include San Diego developer Sudberry Properties, which plans a 2013 opening for a retail center anchored by home improvement chain Lowe’s, under construction on 16 acres at El Camino Real and Palomar Airport Road.
Developer Considers Options
Also, developer Caruso Affiliated, whose projects include The Grove retail center in Los Angeles, recently signed an agreement to purchase a 48-acre parcel off Interstate 5 at Cannon Road, where it is exploring commercial and other options.
Development efforts at the La Costa site have met several planning and other challenges over the years, including the 2008 death of the property’s prior owner, Aspen Properties Inc. CEO John Tworoger. Avoyer said Safeway had been seeking to locate a store at La Costa for several years, and purchased the property from Tworoger’s estate in early 2012.
Davidson said recent movement on the La Costa project, and announcements of other developments on the way in North County, are among signs that San Diego County builders are awakening from a nearly six-year construction slump.
“I think we’re ready to get back to work in 2013,” Davidson said.