San Diego Entitlements Are Killing the Market. Here's How.

San Diego's entitlement process needs big fixes, including somehow getting Millennials more involved. 

That's the message from our panel of developers and commercial real estate pros from last week's San Diego Investment Summit, where Kilroy Realty's experience at One Paseo still echoes concern. BioMed Realty's Tracy Murphy says it took 18 months to get I3's project entitled for 315k SF. “Eighteen months is great when you compare it to what Jamas has gone through, but it's longer than any developer wants to spend at this city,” Tracy says. “For the future of San Diego and what we want it to be...we're going to have to be more progressive on how we handle long-term city planning. It's proven that it's not working the way it is today.”

Tracy was part of a panel of developers who all expressed concern with the city's entitlement process, including Allen Matkins' Heather Riley, Kilroy Realty's Jamas Gwilliam, Sudberry Properties' Colton Sudberry, John Hancock Real Estate's Parker Jones and DTZ's Brett Ward. More than 350 commercial real estate pros came out to The Heights at Del Mar to also see Kilroy's project in action.

Jamas says the biggest challenge is to get more Millennials involved in community planning so they're more aware of the stake development has on job growth. “Most of the people who get on these planning boards are one or two votes to get them on,” Jamas says, adding that their decisions are “very impactful on our economy and our industry.” The worst is the uncertainty developers face in the entitlement process. “I'd take a 'no' right out of the gate if that's the answer,” he says. “A maybe or an uncertain process just kills you.”

Colton says some of these plans that community groups use for a blueprint of growth “are 30 years old and are completely irrelevant in some cases.” On top of that, these volunteer community boards attract, by and large, activists. “For the most part they're not [balanced in their views], and it's a very big impediment to development. It's a big problem in San Diego.” Another issue causing problems for growth is CEQA, especially the “cottage industry” that has grown around obtaining environmental approvals. “CEQA isn't evil. It's the abusers,” Colton says. “How do we modify? How do we pivot? How do we get rid of some of these cottage industries that have come up just to make CEQA the process that it is now that it shouldn't be.”