While the economic downturn is inevitably a forefront consideration for the building industry right now, firms like Hines are seeing the upside of continuing to grow in San Diego.
"San Diego has undergone a turn in its economy since 1993. There is much more diversity, and it is much more attractive to institutional-caliber capital," said Paul Twardowski, vice president for Hines, who oversees the San Diego office. "In the '90s, (San Diego) had the university generating development, but only now is the diversity of the economy driving development and investment here."
Hines, an international real estate firm, has had a presence in San Diego since the building of Petco Park, and it continues to act as the ballpark's facilities manager. Hines also developed the Tony Gwynn Stadium at San Diego State University. Now, the firm is extending its investments into commercial office buildings, such as the new La Jolla Commons in University City.
"We're excited about the next few years. San Diego is showing it has a diverse economy and can weather the storm better than most," Twardowski said. "We're happy to be established and moving into our fourth turn of projects down here. San Diego, in general, is going to be densifying over time, so we're looking to do denser things in urban areas and more mixed-use projects like we've done elsewhere. Urban renewal will be going on, to a great deal."
Twardowski's optimism not only stems from San Diego's continued growth, but also from Hines' own ability to adapt to market fluctuations.
"Fifty years has let our firm learn how to survive downturns," he said. "There've been cycles in the past that not a lot of developers survived -- but we learned how to thrive."
Twardowski attributes this in part to how Hines has diversified its business over various product types. Another key, he believes, is that during slower times sponsorship becomes a more essential part of projects for the investor and lender. Because Hines has garnered industry trust during its half-century tenure, Twardowski said, it is able to secure investments when other firms can't get that capital.
Hines' pre-construction group has also helped differentiate it. Based in Houston, the group consists of 15 individuals who are experienced construction managers, and who have an average tenure of 28 years apiece. They pull together the best-practice findings from projects around the world and help partners in other markets apply them to their work, leaving room for local variation.
"Because Hines has always been very locally driven and project-to-project oriented, the pre-construction group doesn't say, 'Here's the best thing since sliced bread, you've got to use it,'" Twardowski said. "They don't drop down a cookie cutter model in every market."
In San Diego, this local adaptation often has to do with green elements. For instance, the La Jolla Commons building uses just 10 percent of the water that other buildings do. To achieve this, the building accesses a reclaimed water plant in North City and use a dual piping system. Although this was not a requirement for the LEED code, the firm decided that the cost incremental to make such a huge difference was worth it -- especially in a market like San Diego where water is such a valued resource.
Also in its development proposal for the new San Diego City Hall and civic center complex, green considerations had a large impact on design.
"In the Civic Center, we have a four-story building designed to meet LEED gold," explained Twardowski. "We could have made it LEED platinum, but the cost-out was $8 million to go to platinum versus gold -- for just a four-story building. Some things we pay extra money for because we know we want to be greener, like with photovoltaics. But, in general, we think being smart and sustainable is being smart in terms of what you can do at this point, knowing that technology continues to improve and costs are going down."
Twardowski actually got his start on the architectural side before going on to work in both the finance and development sides of real estate. He began his career in New York and then worked on a Fox Studios complex in Australia before joining Hines' San Francisco office in 1998. He moved to San Diego in 2005 to act as the partner managing this office.
"I've had a fascination with the built environment for a long time," he said. "I was fortunate to travel as a kid and be exposed to great architecture of the past. I was fascinated with castles and cathedrals. I went on to study architecture at Princeton, but I very quickly found out the creative design side was one part I enjoyed -- but that I really enjoyed understanding the driving forces behind why things get built. Those don't always go together, but the blend of the two is what benefits the user."
Twardowski said he finds the physical attributes -- the bricks and mortar -- of development most interesting. When he moved to southern California, he had the opportunity to transition from finance back to development and acquisitions. In San Diego, he's enjoying the fact that the business allows him to put on a lot of real estate hats: acquisitions, property management, development projects and leasing.
"I started at a point of loving beautiful architecture, design and creativity, and now get to work on what it takes to make them successful -- not just as good things to look at," Twardwoski said. "I'm lucky enough to be at a point where I've got the tools and am at the center of all that. And I'm a developer, so I guess I have to be more 'glass is half full,' but I'm certainly optimistic for the future -- regardless of the economic condition. There's too much going on in this city for it not to grow."
Blackford is a Los Angeles-based freelance writer.