By Jason Hughes
Anyone else scratching their head about Manchester “moving forward” with his $1.5 billion project with “unnamed” equity and without any public mention of construction debt (a first in my 30 years of commercial real estate experience for a project like this)? Might the construction “start” have something to do with a personal guarantee and the requirement that at least $160 million be spent on design, construction, completion, tenant improvements, etc. for the Navy’s new headquarters? Was June 1st, 9 months after the final lawsuit (which apparently was a trigger for the guarantee)? Lots of questions—and very few answers. Time will tell if this project actually becomes reality!
Stockdale has a challenge. My understanding is that they’ve gone non-refundable with a large deposit—but their plans apparently call for a significant reduction of retail space. Instead, they want to convert most of it into “creative office”—but the City’s entitlements require 700k square feet or more of retail. Hmmm. That means they probably need to negotiate with the City for a reduction of retail–or will likely suffer huge losses. They’re likely threatening the City that they simply won’t spend as much to redo the project if the City won’t capitulate. If I were King of Horton, I’d force Stockdale to redevelop the entire project—like Cisterra and Kilroy were going to do—not the equivalent of paint, carpet and moving a few walls here and there. Be strong City! Don’t cower!
Thomas Jefferson School of Law (1155 Island)
The law school is moving out and the building’s bondholders have sold it to a real estate investment group out of Denver called Miller Global Properties. Miller GP paid a huge price for it—and now has the much-challenged feat of re-improving the inside and leasing it out. I’m rooting for them to not lose all of their investors’ money on this bet—but the stakes are significant. Can they find a large (or several large-ish) companies that want to be in East Ballpark land? Surrounded by residential developments, San Diego’s namesake library—and the many homeless that live in that area of Downtown? Many feel that east of 10th is really pushing it—so venturing towards 12th isn’t for the meek. Hopefully, Downtown will start to find companies who think differently about this area—and somehow find a way to make it their home.
1010 Second Avenue
It will likely always be known by most of us as the “Executive Complex” despite the new owners wanting it to be known as “Tower 180.” The new exterior skin of the office building looks like something out of Gotham City rather than San Diego—but I’ll hold final judgement until it’s completed. What’s REALLY shocking is that the new owners anticipate charging $3.50 per square foot and up for rent! Considering I represented the City in there for about one-third of that price not that long ago (for half the entire building), I think they have their work cut out for them!
Jason Hughes is chairman, CEO, and owner of Hughes Marino, an award-winning commercial real estate company with offices across the nation. A pioneer in the field of tenant representation, Jason has exclusively represented tenants and buyers for more than 25 years. He writes about topics in commercial real estate from a tenant’s perspective on his blog, Downtown Dirt. Contact Jason at 1-844-662-6635 or firstname.lastname@example.org to learn more.