San Diego slips to 32nd in builder interest: Planning groups at fault?

San Diego slips to 32nd in builder interest: Planning groups at fault?
The main lobby is under construction at the new Willows Hotel and Spa at Viejas Casino. San Diego ranked 19th in interest by hotel developers and investors last year but fell below the top 20 cutoff this year. (Alejandro Tamayo / The San Diego Union Tribune)

San Diego County slipped from 23rd to 32nd in a national ranking of developer and builder interest among 78 metro areas covered in the Urban Land Institute's annual "Emerging Trends" report.

  • The top market was Seattle, followed by Austin, Texas; Salt Lake City, Utah; and Raleigh/Durham, N.C.
  • San Diego remained fifth in markets for residents in the five gateway metros, Boston, New York City, Washington, D.C., San Francisco and Los Angeles. It was sixth in apartments.
  • The county failed to rank among the top 20 in hotels, office and industrial properties.

Here's the full story:

San Diego County slipped to 32nd place this year in the Urban Land Institute's annual ranking of places attractive to real estate developers and investors. It ranked 23rd last year.

Local industry leaders place part of the blame on powerful community planning groups.

"Don't pay attention to that (ranking)," advised one of the study's authors, Anita Kramer, who reviewed the findings at the local ULI chapter forum recently. She is vice president of the ULI Center for Capital Markets and Real Estate.

And one of the panelists, Michelle Lord, senior vice president at locally based Fairfield Residential, said San Diego remains high on the list of national apartment buyers and developers. ULI ranked it sixth, down from third last year.

But the idea that San Diego ranks below Sunbelt cities like Fort Lauderdale, Fla., brewery-bubbling Portland, Ore., or former rustbelt-capital Pittsburgh, grated on San Diego real estate executives who depend on outside capital to fund new projects and buy old ones.

Real estate economist and panelist Gary London and moderator Lynn LaChapelle, managing director at the Jones Lang LaSalle brokerage, seemed to strike a common chord when they blamed community planning groups for making their clients' lives miserable.

"We need to 'declaw' the community groups and the infrastructure of policy-making bodies in communities mostly composed of white and gray hairs that don't have a future and empower those that do," London said.

LaChapelle's put down went like this: "I recommend if you do have a planning group and you are an enlightened real estate citizen, jump in and take control and don't let the housewives who walk dogs get control of the planning group."

Joe LaCava, former chairman of the city's Community Planners Committee and a developer consultant, was not present at the meeting but said later that London, LaChapelle and other industry leaders should not pick on citizen planners. Those volunteers are also frustrated that city officials' promises of better services and facilities repeatedly go unmet. He noted that the makeup of the groups varies and often include real estate industry professionals.

"If we get rid of planning groups, something else will take their place that's less structured and more difficult to deal with," he said.

Besides, LaCava said, if some planning groups take an unreasonable position against a developer or project, they can lose credibility and the Planning Commission and City Council will overrule their resolutions.

The ULI study did show San Diego losing standing in several real estate areas from last year's rankings.

But the bigger picture, as summarized by Kramer, is that the 9-year-old recovery is inevitably coming to an end — and major demographic and consumer choices are forcing change in what is built and where is the action headed.

"Cycles are getting milder and longer," she said, and the prospects today point to a "long glide path to a soft landing."

Gen Z: Sharing socks, not office space

Besides planning issues, the panel also discussed the ULI report's findings on the arrival in the workforce of the 75-million-strong "Generation Z," born since 1995. Its oldest members are graduating from college and bringing a new perspective, partly influenced by a lifetime of digital engagement via smart phones and other devices — prompting one nickname for this group, "iGen."

"Gen Z seems to seek mentoring and hands-on management and finds work-at-home arrangements less attractive," Kramer said.

Instead of noisy, open office plans, they want a return to quiet cubicles.

"Thirty-five percent of Gen Z would rather share socks than office space," she said, quoting one expert.

Meanwhile Gen Z's parents, including baby boomers, are working into their late 60s and 70s.

"If you have boomers working for you or with you, at least half will be around for a while," she said.

On retail, Kramer said despite all the hype on e-commerce, physical stores still command 90 percent of the shopping experience. But just any old store won't do.

"I heard a retail expert talk about how the worst enemy of retail is boredom," she said.

As for San Diego's place in the national real estate firmament, Kramer said it still scores within 10 percent of seven of the top 10 markets and is the fifth largest target for migrants from the five primary markets — New York, Boston, Washington, D.C., San Francisco and Los Angeles.

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