TJ to the Max?
Despite crime and violence in Tijuana, the next big opportunity in San Diego may be in Mexico. That's just one tip from our San Diego Economic & Real Estate Forecast. (Read them all before slipping into your swim trunks.)
Randy Ataid, executive director and professor of entrepreneurship at Point Loma Nazarene University, gave opening remarks. He joined from the private side eight years ago and is a CRE owner himself (Liberty Station Conference Center, among others). He's semi-optimistic about the economy:Hiring has resumed, but at an anemic pace; the California budget picture is improving, but more people continue to leave the state; the US Marine Corps is downsizing, but we're bringing a lot of Marines home, so he sees no significant shift in local military employment capacity. Job gains in San Diego generally have been widespread, even in the construction industry. Thanks to Allen Matkins attorney Fernando Landa for moderating our all-star panel.
Mexico got a big nod from our experts. According to Randy, one topic that's rarely talked about is the country's strength and cross-border economic activity. It's taking market share away from China in manufacturing, and if Mexico can compete in labor, then "smart people in San Diego need to think about that." Citing the potential for cross-border tourism with Mexico, San Diego Tourism Authority president Joe Terzi said half of the Japanese tour operators he met with in December wanted to know whether they could go to Mexico if they visited San Diego (no doubt for fresh Gulfsashimi).Developers that Dealy Development president Perry Dealy knows who have gone down to Mexico have been very successful. "That's going to be a key part of who we're going to be in the future."
Perry is hoping to get major projects like Manchester Pacific Gateway up and running. Pent-up demand due to lack of new product justifies moving forward in sectors like hospitality, and he's seeing global money return to the market. On dealing with community groups during the entitlement process:"These people come out and they want to monitor and manage a lamp post." (Well, things can get pretty unruly when they fraternize with telephone poles.)It's almost a barrier to providing new facilities. But there are positives from a normal entitlement process:"The project should be better than if you just went in there and slammed something up."
Joe says demand should be back to highwater '07 and '08. The Convention Center expansion could start in the beginning of next year; now it produces up to 800,000 hotel room nights per year, and the addition would bump this up to 1.3 million. The other hot ticket is the airport expansion. In the last go-round, hotels got built with little justification because money was flooding the market. While those days are gone, mid-sized product will be developed. "Large projects will be difficult to do, and they have to be well vetted to make sure they make sense."
Planning and architecture firm MW Steele Group is about to celebrate its 30th year. Founder Mark Steele is seeing different kinds of projects than in the past, such as apartment rehabs and memory care units for seniors housing. In previous recessions, developers spent the downtime on forward planning so they'd be ready when the recession broke. "We've done zip of that sort of thing" because nobody's got money for it upfront; secondly, there are no big tracts of land to worry about. That said, today's more thoughtful approach will produce better work. Cities are trying to create streamlining in the approval process to encourage growth.
Our panelists also discussed San Diego's roadblocks.Perry says the biggest need and challenge is Class-A office.Hecontends it's been a huge mistake historically to encourage office development where the CEOs live in coastal North County; the next workforce generation wants to be an in urban locale.Mark says "density's not a bad word" to Millennials, but you don't need to go high-rise. In addition, he urged folks to pay attention toCivic San Diego, the "new and revised version" of CCDC.Joe notes that expansion will take the Convention Center to another level, allowing it to book larger,more lucrative events. Even with the existing facility, the TOT tax raked in$151M last year.
Where will your summer vacation take you this year? TellJulie@bisnow.com.
