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State Looks To Turn Vintage San Diego Building Into Apartments, City Offices

California Deploying Underused Government Properties in Bid To Boost Affordable Housing

CoStar: A concept rendering, subject to revision, shows plans to develop offices and about 1,000 apartments on the current site of a 1960s-era California state office building in downtown San Diego. (The Michaels Organization)

By Lou Hirsh CoStar News June 9, 2022 | 10:24 AM

A mixed-use project being planned by the state for downtown San Diego could help alleviate the city’s chronic shortage of affordable housing while also creating a replacement for its aging City Hall complex.

After a competitive proposal process, the California Department of General Services selected The Michaels Organization, a Camden, New Jersey-based developer, for a mixed-use apartment and office project that would replace an underused, 1960s-era state office building at 1350 Front St.

Preliminary plans call for approximately 1,000 rental units at varying levels of affordability, which would be built within two 500-foot towers on the 3.2-acre site. The development would also include approximately 400,000 square feet of office space, and the state is in talks with the city to occupy all or most of that space — possibly as part of a new San Diego municipal complex.

“The city will be meeting with the state in the coming weeks to explore what level of participation, if any, it will have with the Michaels Organization’s proposed project,” Penny Maus, San Diego’s director of real estate and airport management, said in an email to CoStar News.

The city has provided informal input to the state’s general services officials and the California Department of Housing and Community Development, which is overseeing the project’s residential components. The housing department views the two-block redevelopment as a way to help boost the city’s stock of affordable housing as part of statewide efforts to use government-owned properties for that purpose.

“Working to meet the state’s need of 2.5 million new housing units by 2030 requires commitment, creativity and collaboration at every level of government and community,” Gustavo Velasquez, director of the state housing department, said in a statement from the Michaels Organization on the San Diego project.

San Diego is expected to contribute about 10% of the state’s needed housing over the next 20 years, as large cities across California have seen housing prices soar in the face of persistent underbuilding relative to demand.

Cost estimates for the redevelopment project have not been announced and plans are subject to revision. Michaels Organization representatives did not respond to requests from CoStar News to comment further on the project, which the state has said could break ground in 2024 and be completed around 2027.

The Michaels statement said the developer has been active in California for more than a decade, completing projects including affordable, market-rate and student housing. It also owns and manages privatized family housing on several California military bases.

Most of the current San Diego City Hall was built in the early 1960s, about two blocks south of the downtown site of the state’s planned redevelopment. The city for several years has been looking to modernize its office spaces while consolidating workers in a single complex instead of having them spread among several older downtown buildings spanning several blocks.

State officials said plans for the office component in the redevelopment are still evolving but could include a new civic plaza, fire station and City Council chambers.

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