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Developer Gets First Green Light to Turn Horton Plaza Into Potential Tech Hub

Updated: May 16, 2019

Developer Stockdale Capital Partners cleared the first hurdle with the city of San Diego in its decades-long quest to convert the faded former Westfield Horton Plaza mall into a creative-office mecca to lure technology firms such as Facebook and Google to downtown.

A newly released rendering shows an "amenity deck" outside offices that would replace the current food court at the former Westfield Horton Plaza mall in downtown San Diego. Illustration: Stockdale Capital Partners

San Diego City Council's Economic Development Committee by a 4-0 vote approved a land-use change allowing the developer to lower the minimum of required retail to 300,000 square feet in its proposed renovation project, known as The Campus at Horton. The current land-use requirements call for a minimum of 600,000 square feet of retail at that site.

The retail-requirement downsizing reflects agreement among local government and economic development leaders that the 1985-vintage mall, in the heart of downtown, has seen its time pass as a vital shopping outlet. Most of its tenants over the past decade have departed and consumers flocked to newer suburban centers and online shopping provided by internet retailers such as Amazon.

“Amazon has obviously upended the retail environment,” Dan Michaels, managing partner of Los Angeles-based Stockdale Capital Partners, told council committee members. “In terms of the right and best use, this addresses that.”

The project reflects a growing national trend of re-purposing outdated shopping centers, many of which have lost their shine as big box stores such as Sears increasingly close and leave behind vacancies. Developers are seeking new ways to revive large properties that often sit in the prime areas back into hubs of economic generation by adding more tenants that offer experiences, such as bowling alleys, or just turning them into something else entirely, like offices.

If the full San Diego project is approved by the City Council and local planning officials, possibly by this summer, Stockdale plans to embark on a major renovation that would turn about 770,000 square feet of the almost 1 million-square-foot mall into creative offices. Expected costs have not been disclosed.

Newly released renderings from Stockdale show an “amenity deck” that would replace the mall’s currently vacant food court. Plans now also call for adding four stories with an additional 150,000 square feet of office space to the mall’s former Nordstrom store building.

Since purchasing the mall property in August 2018 for $175 million, Stockdale officials have held meetings with local economic development advocacy groups, labor unions and other organizations to garner support for what it contends will be a transformative project that finally gives downtown San Diego a chance to lure large technology companies that have been eyeing that central urban hub for years.

Local brokers have long noted that the bigger tech players, including Amazon, Apple, Facebook and Google, have never found sufficiently sized creative office spaces to suit their needs in the downtown area. Michaels said Stockdale is in talks with numerous large tech companies – not yet disclosed -- to bring between 3,000 and 4,000 total, high-paying jobs to the downtown mall site, once its project is completed as expected in late 2020.

“We have been active evangelists for San Diego, and that’s been through the technology community,” Michaels told CoStar News, prior to the council committee meeting on Thursday. The San Diego project is modeled after Stockdale’s earlier conversion of a former downtown Scottsdale, Arizona, retail mall into what is now a creative office campus with tech-oriented tenants including Yelp, Square, Zillow and Indeed.

Plans call for the mall's former Nordstrom building to get an additional 150,000 square feet of creative office space. Illustration: Stockdale Capital Partners

According to city data and downtown economic advocacy groups, the downtown area has seen 8.5 million square feet of apartment projects completed over the past decade, bringing in thousands of new residents, but just 60,000 square feet of new offices. One result is that about 75 percent of downtown’s almost 40,000 residents commute north each day to jobs in other neighborhoods including University Town Center, Kearny Mesa and Sorrento Mesa – giving downtown San Diego among the nation’s worst reverse-commute percentages among major city downtown's.

The council committee approval came with a request from members for Stockdale to work with the mall’s remaining tenants to minimize business disruptions during and after the renovation, and Michaels said the company would do that. Representatives of two remaining retail tenants, Macy’s and organic grocer Jimbo’s Naturally, told city officials they will require more direct communication and cooperation from the developer as the renovation proceeds.

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Article By: Lou Hirsch, CoStar

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