Article Via: Lou Hirsh, CoStar
Port of San Diego officials approved several new retail leases for tenants at the aging Seaport Village, even as one of the most popular tourist venues on the downtown waterfront is slated to be replaced by a new mixed-use development.
The newest lease signings, approved by port commissioners, include a new restaurant being opened this summer by San Diego-based hospitality group Grain & Grit Collective in collaboration with cookbook author and TV chef Sam Zien, better known as "Sam the Cooking Guy."
The port board also approved a lease for Seaport Market, a convenience store operated by Traveler’s Convenience LLC, which will offer food and beverages available for delivery to nearby hotels and marinas.
Officials said the latest leases are expected to bring in a combined $1.29 million in revenue to the port district over the next decade. The new leases follow the November approval of new tenants Mike Hess Brewing, Mr. Moto Pizza and Spill the Beans coffee shop, all expected to open later this year at the nearly 40-year-old retail venue.
The 14-acre Seaport Village, at 849 W. Harbor Drive, sits on a larger 70-acre site where developers are in the early planning stages on a $2.5 billion entertainment and hospitality-centric, mixed-use development called Seaport San Diego, being built by a locally based team known as Protea Waterfront Development.
Developers were chosen in 2016 by the port district from among several competitive bids to help rejuvenate the downtown waterfront of the nation’s eighth-largest city. It remains to be seen how all the new and existing tenants at Seaport Village will fit long-term into plans for Seaport San Diego.
Developers have received preliminary concept approvals for plans that include new hotels, retail, an observation tower, aquarium, public promenades and beaches,
potentially to be joined by live performance stages. A Protea division was tapped by port officials in 2018 to manage the current Seaport Village while the larger new project is being planned and processed, with brokerage Retail Insite handling leasing.
Seaport Village, opened in 1980 in a tourist-centric downtown waterfront area known as the Embarcadero, houses an iconic, old-style carousel along with more than 50 restaurants and stores selling souvenirs, clothing and other items.
Built in the style of an old New England fishing village, in recent years Seaport Village has seen an uptick in vacancies as buildings have aged and visitors and locals have sought out other types of downtown activities and attractions.
Developers have said construction on Seaport San Diego is not expected to begin until late 2023 at the earliest, more likely in 2024 or 2025. With several project approvals still pending, full build-out could be at least five to 10 years away.
San Diego port district spokeswoman Brianne Page told CoStar News the upcoming mixed-use development is large and complex. Port officials and developers are aiming to shape the central Embarcadero into a compelling destination for San Diegans as well as tourists, she said.
"In order to do it right, it will take time to finalize concepts, design, entitlements and permits," Page said. "With our current timeline, construction isn’t anticipated to begin for at least five to seven years."
In the meantime, port officials are looking to keep the 40-year-old Seaport Village vibrant, recently investing $2.2 million in cosmetic improvements while allowing for transitioning to the redevelopment. Port documents indicate that the recently approved retail leases call for 10-year terms, but also give the port district the right to terminate the leases anytime after the end of the fifth year with 90 days’ notice.
Termination could come in the event that demolition or construction of any future redevelopment has begun or will imminently commence once approvals are issued by port commissioners. The tenants also have the right to terminate the lease if more than 50% of rentable square feet in Seaport Village becomes vacant in anticipation of upcoming construction on new waterfront elements.
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