Creating Surreal Spaces For Makers, Innovators And Entrepreneurs

Real estate advisory firm Stern & Associates’ founder Howard Stern opened Bisnow’s recent San Diego Future of Real Estate event asking panelists what makes San Diego different from or similar to other major West Coast cities.

Bixby Land Co SVP Mike Severson said San Diego is on the water like three of the four other major West Coast cities (Seattle, San Francisco, Portland and LA), but Downtown SD is very different. San Diego is well-located and moving in the right direction compared to these other cities, he said, including efforts to put its stadium Downtown. 

Seattle also has its stadiums downtown, said JMI Realty VP James Chatfield (above left, with Howard Stern and Star Hughes-Gorup), who has spent a lot of time in Seattle looking at hotel and residential development. James said Seattle’s apartment buildings are mostly lofts and act almost like hotels.

“Employers there a so forward-thinking they’re developing buildings that are live/work/play,” he explained. “It’s all there for you—they don’t want you to ever leave." It's evolving to serve Millennials, which means less worry about parking because no one has a car, he said.

"When I look at East Village and what’s happening there, I could see it developing similar to Seattle,” he said, noting East Village is a flexible environment, with shared spaces that blur the lines between different product types.

Hughes Marino director Star Hughes-Gorup, whose company represents Downtown SD tenants, said San Diego developers are conservative. “This is why you don’t see huge towers, like in Dubai and other places in the world.”

Makers Quarter urban planner Stacey Pennington  (pictured, flanked by Jarrod Russell on the left and Mike Severson and James Chatfield) believes this is a good thing. “Authenticity is important,” she stressed, noting East Village has a stock of old four- to six-story brick buildings, providing an opportunity to create a authentic product not currently offered in the Downtown environment.

The Makers Quarter is a mix of new and existing buildings. “Our new buildings are designed as completely open space in a way that really exploits natural light and air all the way to the center by maintaining a 70-foot width and side-loaded corridors that don’t obstruct the center of the building."

Howard asked panelist Jarrod Russell, director of public affairs for Underground Elephant, a digital marketing firm, what were the key drivers in his firm's decision to move from a traditional office building in Mission Valley to a single-story, 20k SF, 1932 building (pictured) at Eighth and J streets formerly occupied by TR Produce Inc.

Jarrod said traditional office towers have a doughnut in the middle of the building for the elevator shaft. “Culture is paramount for our company—it drives cohesion and creativity, especially when things get stressful,” he said. The firm's CEO, Jason Kulpa, wanted to solve the problem of how to unify the company culture and began actively looking for a more creative open space, he said.

"I think he was looking for the next representation of what would embody Underground Elephant in the future," Jarrod said. They found that in the TR Produce building, one of about a dozen surviving brick buildings in the East Village.

The company has about 100 employees and is a fast-growing firm, so wanted a flexible space to expand as the company grows. The new building has the capacity for 145 employees.

Howard wanted to know what tenants are looking for in East Village versus Downtown. Star said the challenge for East Village is not enough space for everyone that wants to be there. Diamond View is the only large office space, and it’s 100% leased at the highest rates in the area, she said, noting that tenants are going into Class-B buildings in Downtown and Little Italy that have been converted to tech hubs with gyms.

Jarrod (pictured left, with Stacey Pennington, Mike Severson and James Chatfield), said place can be a disruptive, because talent goes to places they like and the jobs follow them.

Underground Elephant’s new space increased the company’s visibility. “There are 200 to 300 startups in Downtown SD, but you don’t see them,” he said, suggesting identity can get lost in multi-tenant, multi-level buildings.

There are many layers of pent-up demand, Stacey added, noting Downtown is in competition with East Village. She said some Downtown buildings have a gym, outdoor spaces, coffee and food service, bocce ball or ping pong. But they don’t have the energy of East Village—“you have to create it yourself,” she said. In places like East Village there’s an opportunity to create a culture of loyalty and growth.

Jarrod said East Village offers a surreal real estate environment, which he defined as “a little ahead, but always in the right direction.”

"On a scale with surreal being a 10, we’re unable to get to surreal out in the suburbs, so I’m going with cool, which is an eight or nine,” said Mike (pictured here with Stacey Pennington and James Chatfield). Bixby Land buys underperforming two- to five-story properties, mostly in suburban locations, and renovates them to creative office space.

"We’re opening up the outdoor environments and providing gyms," he said. "One of the things that prevents us from getting to the surreal level is you don’t have all a lot of walk-to amenities and energy that comes from the guy across the street or down the block. You walk out on the street and there’s energy in downtown environments."

In the suburbs you have to create it, he said. "We bring a food service on-site—we put a café and coffee operator in our buildings in El Segundo and LA. We have a 400k SF complex with seven buildings in the Silicon Valley—right by Levi Stadium—with a two-acre courtyard in the middle. We put in a coffee service, bocce ball courts, every kind of small sporting thing you can do. I think we spent $12M just on the courtyard," Mike said.

James discussed what JMI is doing at Ball Park Village, which surrounds Petco Ballpark in East Village. He said 720 residential units and 55k SF of retail are under construction. This area of East Village encompasses the site of the proposed joint-use Charger Stadium-Convention Center complex, which would create a 225k SF exhibit hall underneath the stadium complex.

Intrigued by NY's Highline, James said, "We tried to take a little bit of the Highline concept to connect the pods within our Ballpark Village residential projects. So no matter what side of the project you’re on, you can still walk around and see great views." There are outdoor communal areas, including a civic plaza, and plans call for community service retail and restaurants, as well as flex spaces, like kiosks for game-day activities. The next phase on the south side of Imperial may include a hotel.

James said the Chargers want their project to be integral to East Village—what East Village is becoming and what it will become. He explained JMI and the Chargers hope to interweave the sports and entertainment component with the fabric of the East Village neighborhood.