San Diego’s Commercial Real Estate Market: A Thriving Opportunity
At Hammer and Hampel, we are committed to offering valuable insights into real estate investing. Our mission is to enhance the knowledge of our current and potential investors and we appreciate your feedback on our articles and welcome your suggestions for future topics.
Hammer and Hampel proudly present The Dalton Hotel, a luxury adaptive reuse project that encompasses an 11-unit boutique hotel, a ground floor restaurant, and a speakeasy, all within two neighboring historical properties in the vibrant Gaslamp District of San Diego. Nestled in the heart of this dynamic district, The Dalton Hotel enjoys a prime location that takes full advantage of the area's strong demand for unique and trendy hospitality experiences. Additionally, this historic and innovative mixed-use concept holds a prominent position at the entrance of the new 5th Avenue Promenade, further enhancing its visibility and overall appeal.
Throughout this blog, we will give details on our newest market surrounding our recent investment, The Dalton.
San Diego: A Glimpse into the Market
San Diego's commercial real estate market is an appealing destination for investors. The city's Metropolitan Statistical Area (MSA) boasts a population of 3,319,000, offering a substantial customer and labor pool. A larger population often leads to increased demand for commercial spaces, making it an attractive prospect for real estate investment. Additionally, the city maintains a low unemployment rate of around 4%, signifying a stable workforce that can attract businesses and tenants seeking to establish or expand their operations. The lower unemployment rate can also drive consumer spending and business growth, further bolstering the real estate market. With employment growth at approximately 2.3%, San Diego presents a robust economic environment. This steady growth rate suggests the creation of new jobs and expansion of businesses, potentially leading to increased demand for various commercial spaces, including office, retail, and industrial properties.
San Diego has solidified its status as a prime tourist destination, consistently attracting a substantial number of visitors. The Convention Center, located just 0.7 miles from the city's core, has seen a significant uptick in events and welcomed over 500,000 attendees in 2022, resulting in the booking of an impressive 1.5 million hotel room nights. The city's vibrant spirit is further underscored by the impressive turnout of 2.9 million attendees at Petco Park. With the expansion of San Diego International Airport, which is conveniently situated 2.9 miles away, an additional 30 gates are set to accommodate higher passenger volumes. Reinforcing its appeal, a 2023 Marcus & Millichap Report identifies San Diego as California's most sought-after lodging market, welcoming an astounding 28.8 million annual visitors. San Diego's unique blend of cultural offerings, diverse events, and accessible transportation options make it an enticing choice for travelers seeking an unforgettable experience. Notably, the city has witnessed a remarkable 15% increase in population from 2000 to 2019, reflecting San Diego's enduring appeal as a place to live and do business. This population growth trend underscores the city's overall attractiveness, making it an enticing market for real estate investors
Source: San Diego Workforce Partnership
Exciting New Developments Around San Diego
San Diego is not only a thriving market but also a city marked by exciting new developments. Notable projects include:
● Horton Plaza: A $330 million project featuring a 1 million sqft "campus" with international dining, retail, wellness, and large venue spaces, located just a block away from The Dalton.
● Seaport Village Revitalization: A massive $3.5 billion project that promises to redefine the San Diego skyline, situated only 0.9 miles from The Dalton.
● Research and Development District (RaDD): A $1.6 billion, 8-acre project hosting five buildings of labs, office space, and retail along the waterfront, just 0.8 miles from The Dalton.
● Freedom Park & Maritime Museum: A combined $100 million renovation project sharing waterfront real estate with exquisite restaurants over the bay, situated 1.1 miles away.
● Increased events at the Convention Center: With over 500,000 attendees in 2022 and 1.5 million hotel room nights booked, the Convention Center is a bustling hub for potential customers and clients, located in the heart of San Diego.
● Increased Gates at San Diego International Airport: The addition of 30 extra gates is set to significantly increase passenger volumes at the airport, just 2.9 miles from The Dalton.
● 5th Ave Promenade: The Dalton enjoys prime placement at the entrance to this highly anticipated project, becoming a part of the city's thriving cultural scene.
Unique Market Factors
San Diego's commercial real estate market offers unique opportunities. In 2023, the city imposed a restriction of 5,500 licenses, limiting the supply and enhancing the value of properties like The Dalton. Furthermore, the upcoming 'Gaslamp Promenade' project, scheduled for completion by 2025, is set to revitalize 5th Ave and add a new Gaslamp Quarter Sign just north of The Dalton. This project promises tremendous visibility for our site, potentially increasing foot traffic and recognition.
The image on the bottom left represents The Gaslamp Promenade, a recent initiative set to transform the stretch of 5th Ave from L St. to Broadway into eight unique pedestrian plazas. Additionally, a new Gaslamp Quarter Sign is planned to be installed just north of our project at the intersection of 5th Ave and Broadway. The bottom right image shows The Promenade, which was approved late 2021 and is currently in the final stages of planning with an expected completion by 2025. The new Gaslamp Quarter sign will be steps away from the entrance to The Dalton providing tremendous visibility to our site.
We are very excited about the transformation of 5th Ave through The Gaslamp Promenade and the imminent completion of The Promenade by 2025 and are thrilled about the vibrant energy and enhanced visibility these projects will bring to San Diego.
San Diego's commercial real estate market represents a gateway to creating an exceptional hospitality destination. As you explore the dynamic landscape of San Diego, you'll find The Dalton Hotel at the forefront, ready to provide travelers with a one-of-a-kind stay. With remarkable projects like Horton Plaza, Seaport Village Revitalization, and the 5th Ave Promenade, the city is on the verge of redefining its skyline and cultural scene. The expansion of the Convention Center and the increased gates at San Diego International Airport only add to the convenience and allure of this thriving destination.
As we continue to explore real estate investing, we encourage you to stay connected with us, providing your valuable feedback and suggesting future topics that interest you.