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San Diego's commercial development changing face

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Commercial development in the San Diego region is taking new shapes -- changing with both the population and the landscape.

Commercial office development has a new face and new neighbors, as demographics change and cities work to reduce traffic congestion by integrating land uses.

The face of retail is changing as well. Across America, shifting demographics are inspiring new trends in mixed-use development. These changes pose exciting challenges and opportunities for developers, planners and public agencies.

The 'Y' factor looms for retailers

Nationally, demographic trends show that tomorrow's consumers will be younger and more ethnically diverse.

The Echo Boomers, also known as Generation Y, are the children of the baby boomers and, according to the Urban Land Institute, they range in age from 5 to 24 and are 88.7 million strong in the United States.

According to the San Diego Association of Governments (Sandag), almost 30 percent of our region's population is composed of Baby Boomers. The Echo Boom population is just as large: 26 percent of our residents today are under the age of 18.

Today, just over half of the regional population is non-Hispanic White. Diversity will continue to increase -- significantly in California -- over the next quarter century.

As our demographics change, so do our lifestyles. Consumers want convenience, comfort and interest. Retailers are increasingly targeting more highly segmented market niches: people who live, work and shop very differently than we did 20 years ago.

Land scarcity impacts commercial

Our society is changing and so is the landscape around us. Opportunities for Greenfield development in the San Diego region today are few and far between. Only Otay Mesa and Chula Vista have substantial commercial office land set aside in their general plans.

Communities like Carmel Valley are good examples of horizontal mixed use. However, as urbanized land becomes more scarce and costly, trends will be to push upward instead of outward. That trend is best illustrated today in downtown San Diego, and is starting to emerge in the urban centers and surrounding communities.

Given the trend toward "smart growth," even new master planned communities will incorporate a mix of uses at higher densities than developments of the past.

Virtually all the larger master-planned communities ProjectDesign Consultants is planning today have higher density, mixed-use town centers that include employment areas.

Many public agencies recognize these market trends and are working to remedy the conditions that have separated land uses in the region and caused nightmarish traffic conditions on our regional roadways.

A number of government planning efforts are now underway that will create new opportunities for higher-intensity, more vertical mixed-use development in urban and suburban communities.

On a regional scale, Sandag is just completing its landmark Regional Comprehensive Plan, or RCP, a sweeping policy document that serves as a blueprint for smart growth.

"The RCP calls for more mixed-use centers located near supportive transit," said Bob Leiter, director of land use and transportation planning at Sandag. "Our goal is to provide transportation funding incentives to local cities that implement smart growth projects. We hope that those agencies will provide additional incentives to encourage private sector participation."

Cities like San Diego, Escondido and Chula Vista are actively engaged in such programs. Laurie Madigan, the city of Chula Vista's director of community development, reports that the city is working actively to revitalize its downtown area.

According to Madigan, the city's efforts have included financial participation in new office development; upzoning residential land in the core area; creating a new mixed-use zoning category; and issuing of Requests for Proposals for new housing on city-owned land.

Main Streets throughout the country are bounding back from the "malling of America" due to successful urban residential redevelopment efforts like Chula Vista's.

These new Main Streets are well positioned to satisfy the needs of shoppers in today's niche market segments.

Challenges for the future

Efforts by local public agencies are important if we hope to satisfy the unique housing, retail and workspace needs of the Echo Boomers to come.

Recent urban infill developments have served Generation X-ers and Baby Boom empty nesters. Given the size of the Echo Boom population, the challenges and opportunities of meeting the lifestyle needs of this next societal wave will be great.

From the private sector perspective, there are a number of challenges with mixed-use development. Our urban clients report that lenders have historically been reluctant to fund mixed-use projects, and insurance costs are high. Progress, however, is being made in both of these areas.

In new suburban development, the greatest challenge that we find in the planning of smarter, master-planned communities is determining the size of mixed-use centers. A critical mass of mixed uses is needed to make the town center an attractive and viable gathering place. The risk is in making the center too large and creating a long-term burden on the developer and community. Striking the right balance is critical to the project's success.

Finally, from a public standpoint, government jurisdictions can support mixed-use development by updating outdated zoning policies in their general plans and adding supportive policy and regulatory language.

Zoning for a critical mass of residential to support the companion commercial development is important, as is the integration of transit. Financial incentives are vital tools, particularly in softer market areas. Agencies must also work to streamline entitlement processes for mixed-use projects. Too often, politicians sit back while developers take the heat for increasing densities in a community when the project actually benefits in the city.

Mixed-use development is the trend of the future in San Diego and throughout the nation. These are the places the Echo Boomers of tomorrow will live, work and play.

Ruggieri, ASLA, is principal of ProjectDesign Consultants, a multidisciplinary planning and engineering firm based in downtown San Diego.

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