SAN DIEGO, Sep. 26, 2014 / San Diego Business Journal/ by: Lou Hirsch/ — Owner Davlyn Investments is in the midst of an extensive renovation of La Plaza, a retail center at Girard Avenue and Wall Street.
Property by property, La Jolla’s central Village area is being remade as several older buildings get new owners who are now making plans for upcoming townhomes, stores and restaurants, a performing arts center and a luxury movie theater.
Many of the deals setting the stage for this wave of change have taken place in 2014, and experts point to a confluence of factors now shifting things into gear. Those include a continuing movement of residents from suburban areas to established, walk-friendly urban centers with lots of nearby amenities, and a longtime scarcity of places to build in San Diego’s established coastal commercial hubs.
The upscale La Jolla has long had higher property and rent costs compared with other San Diego neighborhoods. But an improving economy and still-low financing rates — with an abundance of financial backers looking to put investment money to work — are raising deal price tags and encouraging longtime property owners in the Village to sell.
“It’s a matter of investors now willing to take more risks, and usually the first place you see this happening is in these neighborhoods with low supply and high barriers to entry,” said Kevin Choquette, principal of investment services firm Fident Capital in Del Mar.
Fident Capital secured $24 million in project financing for a planned 18-unit townhome development planned for the northeast corner of Silver and Draper streets, with groundbreaking set for mid-2015 pending city approvals.
For-sale housing product is still a tough sell for lenders compared with the hot apartment sector, Choquette said, but La Jolla’s location and upscale demographics generally make it a good bet for the developers and their financers.
According to CoStar Group, a buying group that includes developers William Berwin and Michael Pierson purchased a 10,143-square-foot commercial property on Silver Street, most recently used by the U.S. Postal Service, for $6.8 million in July. Plans call for the building to be torn down and replaced by the townhomes.
Also earlier this year, FDZ Partners LLC of Beverly Hills paid $5.3 million for a 10,300-square-foot building on Girard Avenue that was constructed in 1950 and housed the recently closed Burns Drugs. The new owner is planning a major makeover expected to include apartments on the upper floor.
USA Properties Inc. of San Diego recently paid $6.17 million for several Girard Avenue retail buildings, including the space that houses Harry’s Coffee Shop, a 50-year tenant. Formal plans have not been announced for the buildings and an adjacent parking lot that was part of the deal.
Owner Davlyn Investments is in the midst of an extensive renovation of La Plaza, a retail center at Girard Avenue and Wall Street. Photo by Davlyn Investments
The La Jolla Music Society is preparing to build a $40 million performing arts center on the Fay Avenue site of a 36-year-old retail building that it purchased earlier this year for $9.8 million. Plans include a 500-seat concert hall with adjacent administrative and educational facilities, as the music organization eventually moves from its current Prospect Street venue.
At another Faye Avenue site that formerly housed Jonathan’s Market, Boffo Cinemas is at work on a new luxury movie theater with dine-in offerings, according to plans filed with the city of San Diego.
Among property owners joining in on the spirit of change is San Diego-based Davlyn Investments, currently at work on an extensive renovation of La Plaza, a 27,000-square-foot, Spanish-style retail building that it owns at Girard Avenue and Wall Street, among the Village’s busiest intersections.
The building once housed Jack’s restaurant but has been vacant for much of the past five years. A new restaurant called Catania, operated by San Diego-based Whisknladle Hospitality, has been signed as the first tenant in the renovated building, set to open in early 2015, and Davlyn soon plans to announce several more tenants, possibly including high-end stores, eateries and service businesses.
Davlyn acquired the property in 2012, and the renovated building will sport features including a new clock tower and elevators to make all three floors more easily accessible.
Davlyn Vice President Tara Meehan said the project’s location and format will allow the company to establish a “curated” slate of tenants serving a growing demand for services catering to local residents, as well as the steady stream of tourists that have been flocking to the Village for decades.
“We can get a mix of businesses that complement each other, and not conflict or compete with each other,” Meehan said.
Other stores and restaurants have recently confirmed plans to open elsewhere in the Village. Among those is the upscale steakhouse Donovan’s, which plans to relocate from University Towne Center to a space on Prospect Street formerly occupied by The Steakhouse at Azul.
The cove-adjacent neighborhood known as The Village — sometimes referred to as downtown La Jolla — is roughly bounded by Prospect Street to the north, Girard Avenue to the southwest and Torrey Pines Road to the southeast. Until the middle of the last century, the Village was known mostly for the single-family summer cottages that dotted the shoreline.
The Village now is one of several connected neighborhoods within La Jolla, a community that spans more than 5,700 acres and is currently 99 percent built-out, according to the city of San Diego. That essentially means that any significant new residential or commercial projects in La Jolla will likely involve the renovation or tear-down of existing older properties.
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Learn more about Fident Capital’s contribution to project here.
