The long vacant ground floor of the TR Produce Building (888 J Street) may finally receive an occupant under a proposal before Civic San Diego. However, because the prospective tenant is primarily an office use rather than a retail use, it will require a conditional use permit (CUP) subject to certain findings being made. The prospective tenant, Underground Elephant, “focusses on providing enterprise marketing software solutions to companies. . .” The company has 85 – 90 employees and is currently located in 600 B Street. To mitigate its non-conforming use, Underground Elephant proposes a “Coffee bar” at the front of business, which will be open to the public.
Underground Elephant is seeking to lease 18,660 square feet. Approximately 5.5 years ago, Walmart signed a 10 year lease for the site for an “urban grocery concept” called “Marketside” which it later abandoned. There are 4.5 years remaining in the lease, which Underground Elephant proposes to sublet from Walmart. The short remaining time left on the lease has been cited as the reason the site has remained vacant since. However, the property owner’s receipt of Walmart’s rent payments regardless of occupancy combined with unwillingness of substitute tenants to match the pre-recession lease rate would also constitute reasonable speculation for the reason the prime location (across from Petco Park’s Park at the Park) hase remained vacant so long.
Underground Elephant is classified as an office use, which is prohibited on the ground floor of this site by the Centre City Planned District Ordinance (CCPDO). However, an exception exists for designated historical resources, subject to certain restrictions and a CUP. The TR Produce Building is a designated historical resource.
Also, recently approved CCPDO amendments allow “alternative uses” subject to a CUP with a maximum term of 10 years upon findings that the neighborhood has not yet developed to the extent where active commercial uses may be supported.
Central to the Civic San Diego staff recommendation for approval of the proposal is the argument that Underground Elephant “is an innovative business that the City . . . [and other groups] are attempting to attract in the downtown area, especially in the developing East Village neighborhood.” The report also implicitly acknowledges the oft cited preference of “creative industry” businesses for what is sometimes referred to as “funky space,” i.e. old adaptive reuse buildings such as warehouses and factories. (See also this article from tenant representation specialist Hughes Marino.) The recent leasing by Bumble Tuna of the Candy Factory building at the east side of Park at the Park, as well as statements by Bumble Bee executives, demonstrate that some old-school businesses also prefer “funky space.” Bumble Bee’s lease required similar relief from the CCPDO’s ground floor use restrictions.
Nevertheless, the City Council has allowed the depletion of suitable buildings for no more than parking lots. This was most recently demonstrated in the City Council’s approval of the demolition of the former Braun/International Male headquarters and Walsh & Chacon buildings on F Street between 7th and 8th Aves to create 35,000 square feet of surface parking. Prior to their demolition, both buildings were among the first rehabilitated and adaptively re-used buildings downtown in the recent redevelopment era, adding vitality to the neighborhood. However, this fact did not prevent their demolition. Moreover, the demolitions were allowed by City Council despite Civic San Diego’s knowledge that the site owners failed to provide proper public notice and despite the fact that the Historic Resources Board had designated one of the buildings an historic resource.
Images from Civic San Diego Staff Report