Golden Triangle to See Even More Building
Despite growing concerns about traffic and overstressed city services, a new generation of office and research buildings is about to sprout up in San Diego’s Golden Triangle, the area bounded by Interstates 5 and 805 and California 52.
Meanwhile, developers promoting continued growth in the area centered on the University Towne Centre shopping mall are criticizing city officials for not spending the $11 million they have deposited in a facilities benefit assessment (FBA) account designated for Golden Triangle-area improvements. They say such expenditures would help cut the area’s traffic snarls.
In just four years as a San Diego office center, the Golden Triangle area has become the near-equal of downtown San Diego in its desirablity to office tenants. Despite the traffic jams, tenants have been attracted by its proximity to North County residential areas, by good freeway access, and by the fact that there is more parking available there than in downtown.
Office “absorption”--or space leased--in the Golden Triangle totaled 480,000 square feet in 1986, just under the 500,000-square-foot figure for downtown, said C.W. Clark Inc. market analyst David Sharp. The vacancy rate in the area is 21%, Sharp said, but that high rate is of little concern to developers because there is a steady growth in demand.
The Golden Triangle vacancy rate contrasts with 18.5% for downtown San Diego, 21.5% for Mission Valley, 33% in the Rancho Bernado-Interstate 15 corridor and 41% in Sorrento Valley, Sharp said.
The largest of the planned projects is a 15-story, 225,000-square-foot office tower scheduled to begin construction in June at the northwest corner of La Jolla Village Drive and Genesee Avenue by developer Alan I. Kay Cos. of Bethesda, Md. Kay is awaiting only final city permits to begin construction and has yet to secure financing for the $50-million project, but the company has ordered the structural steel for the building, Kay spokeswoman Peggy Martin said.
Kay has built 4.5 million square feet of office space in the Washington, D.C., area, but this project, the La Jolla Executive Center, is his first in the San Diego area, Martin said.
“Mr. Kay selected this area for its growth and his ability to place on the market the type of high-quality office product he is known for,” Martin said. Kay’s preferred mode of development is to build office “campuses” totaling several hundred thousand square feet. So far, Kay has bought enough land only for one office building in San Diego, but he is looking at other sites, Martin said.
Also set to begin its first phase of development is the 542,000-square-foot Chancellor Park office and research park in the Eastgate Mall area northeast of the La Jolla Village Drive-Genesee Avenue interchange. The developer is a partnership that includes Roger Joseph Development, several top John Burnham & Co. executives and Old Stone Development Co., the development arm of Old Stone Bank of Rhode Island.
Construction began March 11 on Nexus Centre UTC I, a 138,000-square-foot research and development center at Executive Drive and Towne Centre Drive. It is being developed by a joint venture of Nexus Development Corp. and Great American Development Co. Half of the first phase has already been leased to Orincon, a high-technology company.
Also planning a new building is Bren Investment Properties. Bren plans an eight-story, 164,000-square-foot building on Towne Centre Drive just south of two six-story buildings Bren also has built. The cost of constructing the new building is estimated to be $25 million to $30 million, Bren leasing agent Don Cerone said.
“We’re looking for a window to begin construction within six months--unless everyone builds who says they are going to build. We don’t want to be a part of that,” Cerone said. Cerone added that lenders, sensing overbuilding, have become cautious about financing office projects.
Fueling the fears of overbuilding is the fact that a total of 761,000 square feet of space is now under construction in the Golden Triangle area. Once they open, those buildings will increase the inventory of completed office space in the area, now 1.5 million square feet, by 50%.
