SPECIAL REPORT: Commercial Real Estate

S Suffolk Construction Company has relocated to its regional offices in Little Italy in Downtown San Diego amid a slow commercial real estate market overall. The move is an encouraging sign for the Downtown San Diego Partnership amid a post-pandemic retail recovery and the imminent opening of several new apartment projects, including the Simone Tower in Little Italy and the Radian building in the East Village neighborhood with Target's first downtown store branch.

Betsy Brennan, president and CEO of the Downtown San Diego Partnership, thinks it's a good sign.

She says, "They're one of the largest construction companies in the country, so they know the market well, they know the urban markets'''across the country, and they decided to locate their office in Downtown. "

In the first quarter of 2023, Downtown had the highest percentage of unoccupied office space in the county at 22 percent, according to JLL. However, Brennan believes this situation is temporary and fairly typical of most urban centers in the current economic environment.

Brennan says, "Downtown San Diego is a hub for entrepreneurial and innovative companies because employees are looking for spaces with the amenities, affordability and energy found in Downtown. It's spring, it's exciting in Downtown San Diego. The Padres are back, the conventions are back. The streets are pulsing with energy. This is what the staff needs.".

Suffolk has rented an office' for the past 11 years's roughly 6,500-square-foot space in Mission Valley for its more than 85 employees in San Diego, but earlier this year the company moved into a 10,000-square-foot office complex at Kettner Boulevard and Ash Street.

Zac Hammond, general manager of Suffolk San Diego, says, "I don't think we could have found a better building to match what we wanted to offer our employees. We have all the benefits of Little Italy itself, which is great for our employees. "

Suffolk chose Downtown after looking at office space throughout San Diego because it is convenient for its employees and centrally located for easy access to Suffolk projects throughout the region. The building also has a collaborative workspace if all of a sudden''more space will be needed. Suffolk's new offices feature dedicated space with visual displays, including live streaming from construction sites and so-called virtual reality to visualize and review projects in 3D. Zach Hammond, general manager of Suffolk San Diego, is a member of the Downtown Partnership and the board of directors of the Southern California Chamber of Commerce and is an avid supporter of Downtown. He says, "Downtown San Diego is a fantastic place for me. One of the big trends in the downtown market is what will happen to immediate office space over the next few years and who will be involved in utilizing the 2 million square feet that will come from the IQHQ and Horton' projects'Plaza'.

Mike Berryhill, vice president and division manager of Swinerton construction

says the IQHQ Bay development and Stockdale Capital Partners' Horton Plaza redevelopment are key to Downtown's immediate future. "If these two projects are leased, as everyone hopes, it will attract a lot of professionals to Downtown, and they'll want nice residential spaces," he said. Berryhill is also optimistic about Downtown and San Diego County as a whole. "The market is still active, I wouldn't say it's hot, but it's definitely moving forward," he said. "Demand is still strong, but the financial piece with the increase in interest rates and the financial markets has gotten a little more challenging," Berryhill said.