The proposed project contains three components: (1) retail; (2) hotel and office; and (3) multi-unit residential. In response to staunch opposition, the original proposed maximum height of 190 feet (18 stories) has been scaled back to 110 feet (9-11 stories). Project approval, rather than proposing a height variance or amendment, is requesting removal from the City’s Specific Plan for the Village.
– – Retail: The Park Station project boasts extensive retail. However, the retail real estate market is undergoing dramatic shrinkage, in large part due to the growth of online shopping. In downtown San Diego, many new retail spaces remain empty. In the suburbs, many retail stalwarts are closing. La Mesa’s retail sector is no less on wobbly footing, with recent closings of durable goods retailers and there are rumors circulating of more major closings ahead.
– – Residential Tower: Development costs for mid to high rise towers are substantially more per square foot than projects at the 4 – 5 story. These costs are influenced by things like seismic requirements for towers, steel frame construction (compared to wood for 4 – 5 stories), and parking excavation or above ground garages (La Mesa’s ground is notoriously granite-filled). (For an instructive analysis of development cost and feasibility analysis, see this November 25, 2013 Oakland study) Sometimes sacrifices are made to bring down costs, such as allowing surface or podium parking but the aesthetics (and “smartness”) of the project then suffers. These costs translate into a higher developer break-even point, which in turn requires a higher price per square foot. This is why even in areas where the economics favor mid to high rise construction, like downtown Los Angeles, there is still a substantial amount of 4 – 6 story construction. Financing for market rate highrise residential in the burbs overlooking a freeway appears remote.
- – Hotel and Office: There have been no downtown San Diego hotels financed since 2008, despite the presence of a major convention center, a professional baseball stadium, and a building boom. In contrast, La Mesa has no regional attractions, especially of the type that encourage overnight stays. Existing hotels in La Mesa are of the roadstop variety. Additionally, the same considerations regarding cost of construction,and return on investment applicable to residential development apply to hotel and office development. Financing for a hotel in La Mesa appears extremely remote.
If approved, it’s unlikely that the Park Station project will be built anywhere close to the time frame suggested by the developers or that it will look like the plans and renderings in the current application.