2012 was a big year for commercial real estate, as several hotels were sold and changed ownership and area malls responded to pressure from Internet retail sales by renovating their properties. In the construction industry, the public sector saw more of the spotlight as projects dealing with government-approved developments or tax payer-funded work made the front page more often in 2012.
REAL ESTATE SECTOR
Australia-based Westfield Group completed its 14-month renovation of Westfield UTC in November. New construction added 40,000 square feet to the now 1.1 million-square-foot mall. Additions include electric carmaker Tesla Motors dealership (the first in San Diego), a 14-screen ArcLight luxury theater, Tiffany & Co. and several “fast casual” eateries. The upscale retail and resort-inspired makeover includes botanical gardens, a children’s play area, family lounges, an expanded dining terrace and interactive community gathering spaces. Westfield projected the $180 million renovation, Phase 1 of a three-phase $1 billion expansion plan, will increase its annual taxable sales by $127.5 million and create 2,400 new retail jobs.
Several hotels change hands
Hotel investors continued to see value in San Diego properties. JMI Realty, led by former San Diego Padres owner John Moores, acquired the Inn at Rancho Santa Fe for $28 million. Diamond Rock San Diego Owner LLC, a unit of DiamondRock Hospitality Co. (NYSE: DRH) purchased the Westin at Emerald Plaza for $122 million. In a $105 million three-hotel deal, Greenwich, Conn.-based real estate investment firm Wheelock Street Capital purchased the San Diego Hilton Del Mar from Orange County-based Sunstone Investors. Sunstone also sold the Marriott Del Mar to Annapolis, Md.-based Thayer Lodging Group for $66 million. Chesapeake Lodging Trust (NYSE: CHSP) acquired the Hyatt Regency Mission Bay Spa and Marina for $62 million.
Maryland-based LaSalle Hotel Properties’ $76.9 million purchase of the 120-room L’Auberge Del Mar in December broke records for hotel acquisitions in California last year. At a cost of $640,000 per room, it was the most paid in the state last year, and the second highest price ever paid in San Diego according to Atlas Hospitality Group, which tracks statewide hotel sales. The 4.5-acre ocean-view resort commanded a high price due to its premier location and an extensive $25.8 million renovation completed in 2008. LaSalle also owns the Hilton San Diego Resort on Mission Bay and the Hilton San Diego Gaslamp Quarter.
San Diego home sales hit highest levels
Limited housing inventory (due to a lack of new construction and the declining number of distressed properties on the market) combined with low interest rates drove pent up buyer demand, signaling an inflection point in the regional housing market. November home sales hit their highest levels in seven years. Single-family resale homes, which represent two-thirds of activity, reached a median $390,000, the highest since July 2008 according to DataQuick. The company attributed increases in prices and sales to a growing demand for higher-priced homes and a reduction in available foreclosure properties.
Torrey Garden Hills LLC purchased a 13.5-acre vacant property in Torrey Hills for roughly $39 million with the intention of carrying out the previously approved plan to build 384 condominiums. The development will be operated long-term as apartments, and include 4,000 square-feet of retail space to accommodate neighborhood service tenants. Excavation of the parking garage, which serves as a platform for the residential units, is ongoing according to Dee Snow, who manages forward planning for the developer Garden Communities. Snow estimated the four-story project would go vertical this spring.
--Compiled by Cameron Leigh James
Walmart Neighborhood Market
In April, demolition on a portion of the historic San Diego Farmers Market Building commenced to make way for a Walmart Neighborhood Market, the first of its kind in San Diego.
Citizens and community groups of Sherman Heights were furious, because they were told the historic building would not be partially knocked down.
Demonstrations were held to stop construction and two lawsuits came of it, claiming the project did not go through an environmental impact review process. A judge eventually deemed that the project did not need to proceed with a full environmental review under the California Environmental Quality Act, because the project’s initial study said it “would not have a significant effect on the environment.”
This issue lasted 10 days.
The 45,800-square-foot Walmart Neighborhood Market was slated to open in the fall of 2012, but as of press time is still under construction.
Plaza de Panama
On July 9, after six heated hours of public comment at City Hall, the San Diego City Council voted 6-1 to in favor of a plan to revamp Balboa Park’s Plaza de Panama.
The project calls for the construction of a bypass bridge from the eastern end of the Cabrillo Bridge, looping around the edge of the park and feeding into a new below-ground, pay-to-park garage.
A pedestrian-friendly courtyard and 6.3 acres of parkland will be built on the roof of the new garage and in the plaza area now occupied by a parking lot.
The project will cost $45 million. The city needs to issue $16.5 million in tax-exempt bonds to fund building the $14 million parking garage. Qualcomm founder Irwin Jacobs has pledged to fund the rest of the project.
This plan was met with opposition because of the amount of city funds that would be needed for the project, the redesigning of the park and for the privatization of a parking garage.
Chula Vista Bayfront Master Plan
After a decade of the city of Chula Vista wanting to redevelop its waterfront — and the back-and-forth legal actions and denials for approval — the California Coastal Commission approved the Chula Vista Bayfront Master Plan.
The plan will allow the city, along with the Port of San Diego, to revitalize 556-acres of land west of Interstate 5 between state Route 54 and L Street.
Over the next 24 years, the city’s waterfront will be transformed to include three hotels; a conference center; 1,500 multifamily housing units built by Pacifica Cos.; two RV parks; restaurants; a mix of office and commercial buildings; and 238 acres of open space that will include 130 acres of public parks, trails and bike paths, and buffers that will protect sensitive habitat. The proposed buildings would have a maximum height of 200 feet.
Convention Center expansion
On Oct. 1, the San Diego City Council was also involved in another controversial approval. By a vote of 7-1, the council voted to approve the $520 million expansion of the Convention Center. It will be funded through an increase in hotel taxes.
In addition to approving the financing plan, the City Council also approved the project’s environmental impact report and contracts to issue the bonds for construction of the project.
Opponents of the expansion said the Convention Center does not need to be any larger, since it only fills up during a handful of events such as Comic-Con.
There is also concerns of the structure of the tax, which groups city hotels in three levels based on their proximity to the Convention Center, with those closest levying the steepest tax.
Council member David Alvarez said many hotels away from downtown won’t derive any benefit from the expansion.
A Project Labor Agreement was also agreed up for the work associated with the expansion of the Convention Center.
School construction bonds
Seven of 11 school construction bond measures were passed by voters in San Diego County on the Nov. 6 General Election. All measures passed were to improve school facilities, building new classrooms, buy new equipment and/or construct a new school.
Those school districts that were able to pass bonds were: the San Dieguito Union High School District, Dehesa School District, San Diego Unified School District, Chula Vista Elementary School District, South Bay Union School District, Cajon Valley Union School District and the Grossmont-Cuyamaca Community College District.
The four school districts that did not get the 55 percent of votes need to pass were: Mountain Empire Unified School District, Ramona School District, Del Mar Union School District and the MiraCosta Community College District.
--Compiled by Carlos Rico