44 F
San Diego
Friday, Dec 9, 2022
-Advertisement-

Manchester Has Grand Plans for Mixed-Use in Mission Valley

A representative of developer Douglas Manchester says market factors are shaping up in favor of an ambitious $200 million mixed-use project planned for the Mission Valley campus of U-T San Diego, although, several hurdles must be cleared during the next three to four years.

Manchester recently announced plans for the campus, which he purchased in December along with the media company, that include a 22-story residential tower with 198 units, and a 10-story office building with more than 234,000 square feet of space.

The 12.9-acre site off Interstate 8 would also get a parking garage topped by a pool and fitness center, a biking and jogging trail, and more than 6,000 square feet of retail space.

Dealy Development Inc. President Perry Dealy, who represents Manchester on local projects, said developers are counting on the site’s high visibility and access to two prominent local freeways — I-8 and state Route 163 — to attract office tenants to the project.

- Advertisement -

A New Class A Option

Dealy noted that larger companies seeking to expand locally have few Class A locations left to choose from if they require big blocks of space to put workers at one site.

Before beginning work on the office tower, developers would need to get it pre-leased — with perhaps one or two firms committing to take all of the space — which Dealy said should not be a major problem based on current market conditions.

“We’re confident that we’ll be able to get the entitlements, get it pre-leased and financed, and move forward from there,” Dealy said.

The city will begin reviewing the project later this year, starting with its advisory Mission Valley Planning Group, and it would eventually require approvals from the Planning Commission and City Council.

Dealy said developers are projecting a three-and-a-half to four-year timeline for completion, starting with an 18-month entitlement process and an additional six to 12 months to obtain necessary permits. Developers have said they would take steps to protect the neighboring San Diego River area, and numerous other traffic and environmental issues will need to be worked out.

The office tower would face I-8, while the residential building — a mix of for-sale and rental units yet to be finalized — would face the river.

Dealy said most of Mission Valley’s prominent Class A office buildings are leased to near capacity, and the new project should attract a number of companies — such as financial services firms — seeking a centralized location with good freeway access for employees.

Entertainment Options

The residential building is expected to attract residents drawn to higher-density communities with access to nearby transportation, shopping and entertainment options, he said.

Matt Carlson, a director in the San Diego office of brokerage firm Cushman & Wakefield who handles office transactions, said there has been little new office construction in Mission Valley for a number of years, and the submarket’s space absorption has been climbing for the past several quarters.

There is very little speculative office building taking place in the overall region, and the financing climate calls for large projects to be pre-leased before construction. For instance, Houston-based developer Hines recently began construction on a new high-rise at University Towne Center, after LPL Financial signed a long-term lease to occupy the entire 13-story building.

Carlson said a number of large companies have been itching to expand into centralized markets like Mission Valley, including those involved in financial services, health care and defense contracting.

“Large blocks of space are getting fewer and farther between,” Carlson said. “That (U-T) location might be ideal for somebody’s corporate headquarters.”

According to Cushman & Wakefield, Mission Valley’s direct vacancy rate for offices stood at 13.8 percent at the end of the first quarter, down 1.3 percent from a year ago, and the overall vacancy rate, with subleasable space factored in, was 14.5 percent, down 1 percent.

Both measures were below San Diego County’s overall rates of 14.1 percent for direct vacancy and 15.8 percent for overall vacancy.

Because of its central location coveted by retailers, Mission Valley’s retail vacancy rate is among the lowest in San Diego County, finishing the first quarter at less than one-half percent, according to CoStar Group. The San Diego region’s overall retail vacancy rate was 5.1 percent.

-Advertisement-

Featured Articles

-Advertisement-
-Advertisement-

Related Articles

-Advertisement-
-Advertisement-
-Advertisement-