Retailer’s Exit Lets Developer Stockdale Proceed With $275 Million Downtown Project
By Lou Hirsh CoStar News
Developer Stockdale Capital Partners’ plans to turn a faded downtown San Diego mall into creative offices are back on schedule, after longtime tenant Macy’s dropped its opposition and announced plans to vacate the site in March.
Los Angeles-based Stockdale’s planned $275 million mixed-use overhaul of the former Westfield Horton Plaza has been deemed crucial to bringing big technology companies to San Diego’s downtown, with major tech players generally bypassing downtown’s older office offerings in favor of newer suburban campuses over the past few decades.
Plans for The Campus at Horton, set for completion in 2021, include 700,000 square feet of offices, 300,000 square feet of retail and the addition of new entertainment and civic elements at the Horton Plaza Park next door. The developer has estimated the downtown campus will be home to between 3,000 and 4,000 jobs, though tenants have not been announced.
"We are making a long-term commitment to downtown San Diego and plan to quickly deliver The Campus at Horton as an urban hub for San Diegans to gather and a catalyst for thousands of high-paying tech jobs, defining the future of downtown," Steven Yari, Stockdale managing partner, said in a statement.
The announcement came as Cincinnati-based Macy’s, among the San Diego mall’s original tenants since its 1985 opening and one of just three remaining there, dropped a lawsuit seeking to block the project. Macy’s October suit contended that the retailer, based on terms of its lease that granted it veto power over mall renovations, was provided insufficient notice and involvement in Stockdale’s overhaul.
Stockdale executives said San Diego Mayor Kevin Faulconer, along with several other local government officials and business groups, "all contributed official support to help bring this matter to a successful conclusion."
Full terms of a settlement to end the three-month legal stalemate were not divulged, but Macy’s announced that it plans to vacate the mall by the end of March, after the conclusion of a going-out-of-business sale that started Jan. 19.
"The decision to close a store is always a difficult one, but Macy’s is grateful to have served the San Diego community over the past 35 years," said a Macy’s statement, adding downtown employees where possible would be placed in the retailer’s seven other San Diego regional stores or provided with severance and outplacement services.
New office construction has been relatively rare in downtown San Diego over the past decade, though several owners of older properties have been investing in renovations to make them more competitive by adding creative elements in demand among tech firms. That includes larger, open-space floor plans with natural lighting, and indoor-outdoor gathering spaces.
CoStar data shows that ongoing renovations downtown have recently kept that area’s office vacancy rate around 16.6%, above the regional rate of 9.4%. Completion of the Stockdale project and others in the vicinity could help bring that vacancy down in coming months.
"Not only might that development attract tech firms, but it also could play a key role in increasing demand for the submarket's heavy apartment supply," said CoStar Managing Analyst Joshua Ohl.
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