The Great Migration
by Jim Scott

Downtown's land rush is on and shows no signs of abating. New projects are coming out of the ground at a record pace and developers are eagerly pushing up the price of land. Overbuilding or under-demand does not seem to be a concern for all involved. The current market is part of a larger cycle whose lineage begins with Horton Plaza and temporarily stops at Petco Park. Critical mass has been reached and there is no going back. Beyond Petco are larger demographic and economic issues. What lies ahead of the 2004 Opening Day is the subject of this column.

There will be periods of low consumer demand and price adjustments. This happened many times between Ernie Hahn's vision and the approval of the ballpark. But the direction is clear and many external factors will maintain the forward momentum. The trick is not be sidetracked by the occasional pratfall. Interest rates will fluctuate and employment will vary-but the die has been cast.

All societal changes spin off unintended results in spite of the best of planning. Ernie Hahn unintentionally saved North Park and many surrounding neighborhoods. It may not completely appear on the surface, but the train is leaving the station. Fortunately, there is still time to get on board.

Why There Is No Going Back

All of the inner suburbs to the original downtown, Golden Hill, North and South Park, City Heights and Normal Heights stand at the cusp of a monumental change over the next decade. These long ignored and neglected neighborhoods have been on a straight trajectory downhill since the shopping center in Mission Valley opened forty years ago. Allowing large-scale commercial development north of Interstate 8 outside of the urban core doomed it. The ruling powers yielded to unregulated residential and commercial building outside the original city and its' close-in neighborhoods. I know the population was growing and had to be accommodated. This is offered as an acknowledgment of the result not as criticism.

The rush to the suburbs also trampled downtown. Businesses left and parking lots replaced buildings. No one went south of Broadway. Close by, neighborhood shopping areas devolved into 99-cent stores and thrift shops. The ugly recession of the mid 90's drove these once-vibrant commercial zones into near complete disrepair.

Horton Plaza and the North Park Theatre

Just at Horton Plaza altered the real estate future of downtown and its environs; the proposed renovation of the North Park Theatre will accelerate the process of change already in progress. The two projects have much in common and I suspect the results will play out the same. All of the factors which made downtown a fertile ground for investing two decades ago are now in place in North Park and all of the other semi-forgotten and long abused neighborhoods. The theatre is being redone because downtown is now driving change in the right direction. Since there are no new close-in suburbs that can be created, those seeking to avoid the commute need to readjust their housing expectations. Either that or sit in traffic.

There is also little political will to bring more density into these neighborhoods. Increasing the density has the same market effect and developing new land. The additional supply normally tends to dampen price increases. I suspect density will continue to be the third rail of land politics in San Diego. This means any investments in these older neighborhoods will pay above-average returns over the next decade.

Pre-War San Diego Revisited

As many of the new residents of downtown will create families with kids, play structures and dogs they will eventually need to relocate. Because they are urbanites, they will first look to the close-in neighborhoods. Some will flee directly to the northern suburbs, but most will want to be relatively close to downtown. Those that can will live in Hillcrest and Mission Hills. Those who cannot will look to the less expensive neighborhoods close-by. Single-family homes on decent sized lots will improve dramatically. Normal Heights north of Adams, for example, where homes on 6,000+ square foot lots are plentiful, will gentrify at a pace that pales the changes of the past decade.

The attraction of living close to downtown, gas prices, traffic issues and the growth of downtown jobs will cause a renaissance to occur in these now affordable neighborhoods. The rate of price appreciation in the 92102, 92104, 92115 and 92116 zip codes will outstrip the county averages over the next decade. More importantly, these areas will provide a relatively affordable option to living in Mission Hills or the northern suburbs.

The influx of residents, financially better off than the current denizens, will revitalize the University Avenue and El Cajon Boulevard commercial zones. The charm and coziness of 30th and University is an indelible part of my childhood memories. It saddened me to see the area slide into a world of 99 cent stores and check cashing outlets.

But that will change. Once the Theatre project is tangible and a success, others will be emboldened to move in, open businesses and improve our general weal.

If you doubt this, I remember when the redevelopment of Hillcrest stalled during the past recession. When The Gap located at 5th and University, everything changed.

Read Jim's back articles at www.sqre.com or call him for selected back issues, 619 920 9511