Sprouts, Shake Shack, Sweetgreen Join Stockdale's $550 Million Redevelopment of Former Westfield Mall
By Lou Hirsh CoStar News August 24, 2023 | 3:36 P.M.
Developer Stockdale Capital Partners landed its first retail tenants as part its $550 million overhaul of a former downtown San Diego mall into a mixed-use office campus.
The developer announced the signing of grocer Sprouts Farmers Market, Studio Three Fitness, beauty services provider Salon Republic and fast-growing restaurant chains Shake Shack and Sweetgreen. Financial and size details on the leases were not disclosed.
Los Angeles-based Stockdale acquired the former Westfield Horton Plaza mall in 2018 and is now under construction on a massive project known as The Campus at Horton that is intended to bring new office and retail businesses to the high-profile downtown site near the Gaslamp Quarter.
“These tenants recognize that Horton’s proximity to downtown’s favorable demographics, densifying residential community and overall demand for a curated retail hub make it an ideal location for ensuring their success,” Stockdale Managing Director Jeff Bhathal said in a statement. “This initial tenant mix makes it absolutely clear: this activation of new retail offerings in the downtown San Diego market is here and is long overdue.”
Stockdale remains in talks with other tenants to lease spaces. The 10-acre project aims to replace what was a fading mall with numerous vacancies into a mixed-use project that could accommodate life science among other office tenants. No office tenants have been announced since construction began in 2020.
Public Spaces Developers also seek to serve a growing downtown residential population with new retail and entertainment offerings along with public gathering spaces.
Most new elements are set for completion in late 2023 and early 2024. They include a 10-story life science tower at the site of a former Nordstrom, conversion of a former Mervyn’s store into a five-story, mixed-use office tower, and new retail, dining and entertainment offerings.
Developers are updating building facades and infrastructure with an on-site solar power micro grid, and upgrading traffic circulation to and from the project’s 2,200-stall parking structure. The mixed-use project will also include new outdoor dining and seating areas, and Stockdale plans to activate a 1.25-acre green space for communal gathering within an existing park next door to the former mall.
The entire project includes about 700,000 square feet of commercial space, including about 70,000 square feet of speculative life science space.
Stockdale is competing with other developers seeking to bring biotech and other office tenants to downtown San Diego at a time when that area, like other big-city urban cores, is struggling with historically high vacancy rates amid rising work-from-home trends spurred by the pandemic.
Life Science Biotech developer IQHQ, for instance, has a $1.5 billion life science campus under construction on the downtown waterfront and has yet to announce tenants. That’s in addition to other life science developers with large projects now underway in the region’s more established biotech hubs to the north, including Torrey Pines, University Town Center and Sorrento Mesa.
“Life science demand is primarily concentrated in North County surrounding the University of California San Diego area,” Joshua Ohl, CoStar’s senior director of market analytics in San Diego, said in a market report. “But IQHQ’s 1.75 million-square-foot research and development district project along the waterfront is scheduled to begin delivering this year and will mark a significant barometer of biotech demand in San Diego’s central business district.”
CoStar data as of Aug. 24 showed downtown San Diego’s office vacancy rate at 26%. Its availability rate, including sublease space, is now near a historic high of 38.1%. Downtown has a total of 2.7 million square feet of offices currently under construction, which could increase vacancy rates as those projects are completed.
The latest CoStar data showed downtown San Diego's retail metrics generally more positive than its office numbers, with vacancy at 8.7% and availability at 17.4%. Much of downtown’s retail development in recent years has stemmed from a slew of newly completed apartments, delivering new customers to local businesses.
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