As residential growth in San Diego continues to skyrocket, so does the need for more retail. “There is a tremendous amount of residential development going on in downtown San Diego, with 10,000 units either recently opened or in the pipeline,” says Bill Shrader, vice president of Burnham Retail Group. “This new residential development is creating a need for retail and other services. Like San Francisco, San Diego is a vibrant city right on the bay, and as you go vertical in construction, the views are spectacular,” Shrader continues. “Because of urban sprawl, the area is running out of land, so people are coming back into the city.”

Downtown San Diego consists of seven urban neighborhoods: Gaslamp, Little Italy, Columbia, the Marina area, Cortez Hill, the Ballpark area and East Village. “Each is a true residential urban neighborhood, with five- to 38-story buildings, all with ground-floor retail,” says Shrader. The Gaslamp district is an example of one area where retail development has increased significantly and very quickly. The vacancy in this area is currently about 2 percent; for the rest of downtown, it is about 5 percent.

The Gaslamp area, particularly Fifth Avenue, was previously dominated by restaurants. “Now the restaurants are moving off Fifth Avenue and these spaces are being replaced by retailers,” says Shrader. “Quiksilver, Puma, Anthropologie, Urban Outfitters, Borders Books & Music, Z Gallerie and Lucky Jeans are some of the new retailers entering this market.” The restaurants that are moving are mainly relocating to Fourth and Sixth avenues and to the Ballpark district.

Some major leases that have been closed recently in the Gaslamp district include the Yard House, which signed a lease for 18,000 square feet on Fourth Avenue; Fleming Prime Steakhouse, which signed a 5,800-square-foot lease on Fourth Avenue; RA Sushi, which will move to a 5,000-square-foot space on Broadway; Quiksilver, which signed a lease for 4,000 square feet on Fifth Avenue; and Puma, which signed a 3,000-square-foot lease on Fifth Avenue.

Throughout all of downtown, mixed-use projects are the leading type of development, says Shrader. Some of the companies that are the most active in the market are Oliver McMillan, Intracorp, Bosa Developers, Champion Developers and Lambert Developers. One of the biggest projects in San Diego right now is the Padres Ballpark, which will open in 2004. “The Padres are relocating from the Qualcomm Stadium in Mission Valley, which they had to share with the San Diego Chargers, to this new state-of-the-art urban ballpark,” says Shrader.

In regard to the future, Shrader says, “Watch for continued growth of downtown San Diego, and it spilling over into adjacent areas such as Hillcrest, North Park and Kensington.”

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