By David Marino
It’s very likely that over the next few years the biggest economic development of office space in all of San Diego County will take place in Chula Vista…not in North County and not Downtown. Recent steps for earth-shaking commercial real estate development have been approved in the Otay Ranch Community. The rise of the South County is upon us.
We have seen this coming for some time now as central San Diego is finally beginning to run out of developable land for office building development. My visionary business partner Jason Hughes looked to the south and wrote back in 2000: “We’re about ‘northerned out’ in terms of our ability to accommodate the hordes of workers who each day trundle the Interstate 5 north from Clairemont, Mission Bay and South County to work in the congested employment centers of Sorrento Mesa, Del Mar Heights and Carlsbad.”
Jason’s words have become prophetic. We live in one of the most beautiful cities in the world, yet we waste countless millions of collective hours on jammed freeways commuting to our jobs. UTC, Del Mar Heights, Carlsbad and Sorrento Mesa are great places to work, but continually escalating housing prices, and the lack of adjacent housing in general, within close proximity of those submarkets are forcing most employees to commute.
Various surveys show that roughly 70 percent of San Diego residents work outside of the immediate community where they live, which totals 3 million work trips being made on our highways every day.
A higher-than-average percentage of South County residents drive north on congested freeways to their jobs in Central and North County. One major reason is a lack of quality engineering and white collar employment opportunities in South County—but that’s about to change.
A New Millenia
Millenia is a recently approved master plan development in eastern Chula Vista that will change the way San Diego does business. When you soak up the details you will be as blown away as I was when I met with veteran developer Lee Chesnut, who owns three parcels currently zoned for office development within the Millenia master plan.
Chesnut Properties’ three lots are fully pad ready and entitled for up to 2.5 million square feet of office space. His current plan is nearly 1.5 million square feet of high performance corporate headquarters and high-tech space, all LEED and well building certified. Lee is a “build-it-and-they-will-come” risk taker who has a unique vision for the future of San Diego and South County.
During my visit with Lee, he shared, “My vision is to establish a new place where powerful business can take place. I believe what we’ve designed with the team at Gensler is inspired, and it will put pressure on businesses to consider locating right in the heart of this huge pool of talent who would all love to work closer to home.”
Millenia Office consists of three campuses, with the first campus of 320,000 square feet set to break ground in the fall of 2017. That campus, named “Think,” is fully approved through the city and plans have been submitted for permits. It consists of two buildings of 150,000 and 168,000 square feet, with an amenity building with a cafe and fitness center and a 1,300-car parking garage.
The Think Campus at Millenia Office is targeting LEED Platinum certification, and also a Gold Rating under the new WELL Building Standard, which places emphasis on increasing well-being, health, and ultimately productivity of the people inside the space.
“The new WELL building standard is really exciting for us,” Chesnut shared. “We’ve known for a long time that difference space can affect how people feel and work, but there’s so much science behind it now, that we are able to make physical changes in our space that will positively impact people’s lives.”
There are numerous new housing projects currently being built out and selling at Millenia in the low $400,000s. At that price, employees could own affordable homes and possibly walk to work.
Millenia will also include vibrant retail, restaurant, and hospitality offerings, and numerous public parks.
By bringing business to where highly skilled employees live, companies will have the opportunity to capitalize on reducing employee drive times by a huge amount. That can significantly increase productivity and employee culture throughout an organization.
“I think the potential is there for even local companies to open up satellite offices at Millenia Office, to increase quality of life for the employees who are impacted by the commute,” Lee says. “I’m ready and able to do deals for a half a floor (17,000 square feet) up to mega-scale deals of 1 million square feet.”
Well put, Lee. With the recovery of the office markets from Downtown and Mission Valley to UTC and Del Mar Heights to the north, tenants needing 100,000 square feet or more space have very few options to pick from, and those options are pricey, at $3.50 to $4.50 per square foot. Lee has shared privately with me that he’s willing to undercut any northern office developer as he sits on a favorable land basis, and is ready to compete hard for tenants that share his vision.
Lee points to far-sighted leadership within the city of Chula Vista and the master developers of Millenia as reasons why he can deliver high performance buildings at well-below market rates for this caliber of product.
Hughes Marino has been anticipating this, and all of us are poised and ready to see this change happen for San Diego. The South is indeed rising. With impending high-quality and dense housing, well-placed retail, and now with Millenia Office, business is coming. The days of seeing South County as just bedroom communities are ending, and a new era of commercial real estate ascendancy has arrived.
David Marino is executive vice president of Hughes Marino, an award-winning commercial real estate company with offices in San Diego, Orange County, Los Angeles, San Francisco, Silicon Valley and Seattle. One of the top commercial brokers in all of Southern California, David possesses unrivaled, comprehensive market knowledge, and writes regularly about San Diego commercial real estate on his blog, Suburban Scoop. Contact David at 1-844-NO-CONFLICT or firstname.lastname@example.org to learn more.