San Diego is a hot investment market—if you can find the right asset, that is. Here are some of the top trends we learned about at Bisnow's 2nd Annual San Diego State of the Market last week.
1. Yin and Yang Retail
For Brixton Capital's Travis King (right), SD is a lot like a Dickens novel. “What we're seeing emerge, especially in the retail markets, is a tale of two cities. In retail, you either have a site that everyone wants to be in, or nobody wants to be in,” he says. That said, demand is strong in the market, and he says there are a ton of very good retail opportunities still out there.
2. Lots of Competition
Everyone wants to buy here, but finding deals that make sense is getting tougher. Pathfinder Partners co-founder Mitch Siegler (center) says his firm is optimistic about 2015, but is wary of rising prices. "You have to look under more rocks and dig a little deeper to find opportunities." Travis says foreign and institutional capital have pushed up asset prices, and many real estate opportunities have been “picked over.” And Meridian Capital Group managing director Seth Grossman (left) says people are just pouring money into the market, making it even more challenging.
3. Doug Wilson's Secret High-Rise
Doug Wilson let a bomb drop, telling the more than 300 commercial real estate pros in attendance his firm has a high-rise luxury condo tower in the works somewhere in Downtown San Diego. That's all we know so far. At the same time, Doug also is developing a $200M mixed-use project in Tempe with 260k SF of office and a Kimpton Hotel (here). “There's still tremendous opportunity to do some world-class projects” in San Diego, Doug says.
4. Let The Good Times Roll...For Now
Regents Bank President Steven Sefton (our moderator) asked the poignant question: How long will the good times last? “I think the thing I would take away for everyone is don't think it's forever,” Doug says, adding that though he's bullish on the next few years, something will inevitably happen to slow down momentum. And Travis says those who survive will make sure that leverage and underwriting are realistic. “It's easier and easier to start believing the assumptions that don't live up to reason,” he says.
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