Development Percolates in Busy Mission Valley Submarket

Various SD Projects Call for Stadiums, Academic Facilities, Offices and Housing

Among several new Mission Valley projects is the $65 million Amp&rsand office complex, consisting of two buildings that formerly housed the San Diego Union-Tribune newspaper.
Rendering courtesy of The Casey Brown Co.

Developers have billions of dollars riding on current and proposed Mission Valley projects featuring new sports facilities, offices, apartments, retail and riverfront recreational elements.

Most are in preliminary planning stages, but all will have to pass muster with residents, businesses and city planners long concerned about chronic traffic congestion and pedestrian non-friendliness in this central San Diego submarket.

San Diego city officials recently certified more than 106,000 ballot initiative signatures gathered by a group called Friends of SDSU, meaning that voters will likely be deciding this fall on a proposal to turn the Mission Valley stadium site that formerly housed the NFL’s Chargers into a new western campus of San Diego State University.

Plans call for sports, office, academic, housing, civic and possibly other mixed-use commercial elements on a 166-acre, city-owned site, which would be acquired by the University if voters give their blessing. Development costs have not been announced.

SDSU West is not only the second project put forward for the stadium property - a group known as FS Investors has a soccer stadium-centric, mixed-use project also heading for a November vote - but just one of several other major planned developments that could significantly transform commercial real estate offerings in Mission Valley in the coming years.

Furthest along is the $65 million Amp&rsand, The Casey Brown Co.’s creative-office redevelopment of a two-building complex that formerly housed newsroom and printing operations of the San Diego Union-Tribune newspaper, which moved to a downtown high-rise in 2016 after more than 40 years in Mission Valley.

John Kenney, principal at Casey Brown, told CoStar News that the 330,000-square-foot project is set for delivery this summer after two years of construction on the site near Interstate 8.

Like the former Union-Tribune complex, much of Mission Valley’s office inventory dates back to the 1970s and 1980s. Kenney said Amp&rsand - the name is a tribute to the last impression made by the Union-Tribune’s printing presses at that location - represents the first ground-up offering of large, modern-day offerings in Mission Valley, along the lines of recent office projects that have already gone up elsewhere in San Diego.

The project includes removing the roof to let light into the old printing plant, turning existing landscaping into more usable indoor-outdoor gathering spots, and adding eateries and other upcoming on-site amenities that have become competitive necessities for landlords seeking to lure younger-skewing corporate tenants.

“Right now there really isn’t much in the way of creative office space in Mission Valley,” Kenney said. “We think that’s going to be a big draw.”

Kenney and the developer’s leasing broker at Amp&rsand, Matt Carlson with CBRE Group Inc., said talks are ongoing with numerous potential tenants that were not being disclosed. Carlson said the final tenant mix is likely to reflect Mission Valley as a whole, including industries such as technology, law and financial services, and the goal is to attract at least one large tenant that helps serve as a catalyst that itself draws in other small- and medium-sized occupants.

Carlson said developers are looking to attract young company executives and workers drawn to a transit-friendly environment, similar to downtown San Diego, and seeking to minimize current commutes to places like Sorrento Mesa and North County. Like downtown to its south, Mission Valley has numerous trolley stops, a well-established office base, and a long history of mixed-use development.

“Outside of the downtown urban core, there aren’t a lot of places in San Diego where residents want to see density, and Mission Valley already has it,” said Carlson, who is marketing Amp&rsand with CBRE’s Ryan Grant and Jeff Oesterblad.

Amp&rsand will span 13 acres at 350 Camino De La Reina. Kenney said Casey Brown has obtained entitlements for 130 apartments on the site, and construction could go forward early next year.

Not far from Amp&rsand, Casey Brown Co. is also nearing completion on a $6 million renovation of the Mission Valley office high-rise now called Tower 591 and long known informally as the TD Ameritrade building. Work is expected to conclude this spring at the property, formerly known as Valley Corporate Center at 591 Camino De La Reina.

The property was originally built in 1972 and was part of a two-property portfolio purchased by Casey Brown for $63.1 million in January 2017, according to CoStar data.

See CoStar COMPS #3821913.

The renovation includes a new entrance and updated lobby, café and fitness center, with new common-area finishes and outdoor lounge seating areas. JLL broker Brandt Riedman, who is handling leasing at Tower 591 with the firm’s Richard Gonor and Tony Russell, said talks are ongoing with numerous potential tenants not yet being named.

Riedman said Tower 591, which is currently about 75 percent occupied, should compete well in Mission Valley, where office availabilities of 10,000 square feet and larger have become tough to find.

The transit-friendly Mission Valley submarket, with several trolley stops near its existing retail centers and mixed-use apartment complexes, sits in the geographic center of San Diego. But it also has several major freeways passing through it, making it tough to navigate during daily rush hours and even tougher during the peak Christmas holiday retail season, when shoppers flock to popular regional malls including Simon Property’s Group’s Fashion Valley and Westfield Corp.’s Mission Valley Mall.

Because of those longtime congestion headaches, the city is proceeding cautiously on an updating of the community plan for Mission Valley, which hasn’t been fully revised in more than 30 years.

Projects that haven’t yet broken ground will be subject to thorough public deliberations, as the city aims to boost its scarce supply of housing while enhancing recreational opportunities along the San Diego River and giving pedestrians wider and safer access to trolley stations and commercial centers.

In addition to the dueling stadium proposals heading for this year’s ballot, Mission Valley projects in early planning include developer Hines’ upcoming redevelopment of the 200-acre Riverwalk Golf Course, which could be replaced by elements including more than 4,000 housing units, 1 million square feet of office space, a new river park and a new trolley station. Hines has yet to present formal plans to the city but has estimated the cost at $2 billion.

Adjacent to that site, operator Atlas Hotels and developer Lowe Enterprises are working on a complete overhaul of the 60-year-old Town & Country Resort and Convention Center. That $70 million project was announced several years ago and since revised to include more than 800 new residential units, though recent delays were reported over labor and environmental issues.

Lou Hirsh, San Diego Market Reporter  CoStar Group