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San Diego, CA

Is 600 B St. the first of many downtown office buildings to default?

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1 year ago

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Is 600 B St. the first of many downtown office buildings to default?


One of downtown’s most visible office buildings is in the foreclosure process after years of lost revenue brought on by work-from-home trends.

The owner of the 24-story office tower at 600 B St. is on the brink of losing the building as the lender seeks to recoup more than $83 million in unpaid debt. It is likely the property will be sold at auction later this year or returned to its lender, Western Alliance Bank, property records show.

The building, whose anchor tenants once included the Union-Tribune, is the first major property downtown to begin the foreclosure process. Real estate tracker CoStar said downtown has a 30 percent office vacancy rate.

While downtown is struggling, San Diego County has one of the lower overall vacancy rates (around 14 percent) in the nation, said Tim Olson, a broker with San Diego-based real estate investment managers Jones Lang LaSalle.

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Q: Is 600 B St. the first of many downtown office buildings to default?

Economists

Lynn Reaser, economist

YES: COVID sent people back to their homes to work remotely and they have still not returned to downtown San Diego. The newest space for biotech remains empty. Industry remains in the suburbs where housing is less expensive. Expect more keys to be returned to lenders with office space converted to housing, with more apartments for subsidized lower income households. Downtown will be more of a place for living and entertainment than working.

Alan Gin, University of San Diego

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YES: Downtown San Diego experienced a renaissance after the opening of Petco Park, but that was mostly in residential housing and nightlife. Office employment has been moving to suburban locations for decades. The ability to work remotely has also reduced the demand for office space. Workers continue to seek that option, despite efforts by employers to get them to return to the office. That trend will likely continue in the future, which will jeopardize more downtown office buildings.

James Hamilton, UC San Diego

YES: A number of factors are coming together to put a lot of pressure on the bank loans that finance commercial office space. The post-COVID move to remote- and hybrid-work arrangements has proven to be an important long-term trend. Interest rates moved up higher and will stay high for longer than many people anticipated. And too much wishful thinking went into the construction of what was supposed to be a new life sciences hub for downtown San Diego.

Norm Miller, University of San Diego

YES: In markets like L.A. we might see 20 to 30 percent default before we hit the bottom in the office market. Loan modifications will also occur for those with significant equity after realistic write downs. Some office property will be converted to residential, but only at distressed prices. Note that these dire statistics only apply to the office market, with industrial and retail holding up well, and multifamily doing fine, if not over leveraged with variable rate debt.

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Ray Major, SANDAG

YES: There are three factors affecting the San Diego commercial real estate market that will potentially lead to additional defaults: oversupply of more desirable new class A office space entering the downtown market, demand for office space in downtown has decreased due to changes in work/remote schedules, and growth of additional office jobs in the region has slowed. With vacancy rates exceeding 30 percent in the foreseeable future, older buildings like 600 B St will face a difficult time paying their financial obligations.

Kelly Cunningham, San Diego Institute for Economic Research

YES: The pandemic lockdown was not the sole reason for oversupply of office space, but significantly hastened trends of working from home with little to no need for gathering in offices. Such trends continue unless compelling reasons exist for office workers to gather in person. Office buildings may be repurposed into residential and retail uses or combinations for financial viability, otherwise many more buildings will default into bankruptcy as seen like other downtowns across the nation.

Executives

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Bob Rauch, R.A. Rauch & Associates

YES: The B Street corridor will have a long way to go before returning to low vacancy numbers. The new normal of the hybrid work era has shifted the numbers dramatically, and these older buildings will be the last to recover. The wild card that could jump-start some of these buildings is artificial intelligence — it is growing at rates far beyond those of other technologies and already stimulating office demand in tech hub markets.

Austin Neudecker, Weave Growth

YES: The foreclosure rate of commercial office buildings across the country increased over the past four years. While San Diego residential buildings are in high demand, downtown offices have not fully recovered from the pandemic transition to work-at-home. For older buildings struggling to maintain occupancy, impending debt payments could make owners insolvent. Thus, I expect a turnover in ownership unless existing landlords can drive up occupancy quickly.

Chris Van Gorder, Scripps Health

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YES: I think it’s certainly possible that more downtown office buildings will go into default. Remote and hybrid work is here to stay despite what some employers would prefer, so all that leasable space will not be needed. And downtown buildings will suffer the most given their size and location and all the issues that come with that location for their tenants and potential tenants — including traffic congestion, homelessness, a lack of convenient parking and more.

Jamie Moraga, Franklin Revere

YES: Post pandemic, there hasn’t been an influx of employees returning to office buildings, especially downtown. The area continues to face higher office vacancies than the rest of the region, and with more supply expected to become available this year it will contribute to the likelihood of more defaults. That said, there could be opportunity for some of the vacant office spaces to be converted or repurposed as demand for downtown residential, retail and mixed-use continues to remain positive.

Haney Hong, San Diego County Taxpayers Association

YES: Our region’s center of gravity for economic activity is near and around UC San Diego — just think about traffic patterns. It’s in La Jolla and Del Mar where new medicines and other technologies are envisioned, and it’s there you have the co-location of intellectual firepower, venture capital money, and the networks that mix together to create the innovation we get excited about. Downtown doesn’t have that magic potion unfortunately, so unless offices become housing, defaults may become more prevalent.

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Phil Blair, Manpower

YES: The trend is not good. While a major number of downtown office buildings are owned by one company, Irvine, it is reassuring that the firm has very deep pockets. They should be able to ride out even a multiyear slump in office leasing. Many other building owners do not. Unfortunately, conversions of office space to badly needed residential has been a nonstarter.

Gary London, London Moeder Advisors

YES: The downtown office market is experiencing historically high vacancy rates, now exasperated by the completion of new office space elsewhere downtown. Tenants are also downsizing, and there will be a flight to quality. The older buildings are on B Street, while the quality buildings are to the west and south. Many of these assets are saddled with nonrecourse, variable rate loans in a high-interest rate market. This is a perfect recipe for failure.

Not participating this week: 

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David Ely, San Diego State University

Caroline Freund, UC San Diego School of Global Policy and Strategy

Have an idea for an Econometer question? Email me at phillip.molnar@sduniontribune.com. Follow me on Threads: @phillip020



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San Diego, CA

Mayor Gloria defends Balboa Park paid parking, blames council for rocky rollout

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4 hours ago

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January 9, 2026

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Mayor Gloria defends Balboa Park paid parking, blames council for rocky rollout


San Diego will put off issuing citations for paid parking in Balboa Park for about one month while improvements are made, but Mayor Todd Gloria says the new system is functioning well and being “actively adopted.”

In a long and harshly worded memo released Thursday, Gloria said recent calls by City Council members to suspend the program were politically motivated and examples of bad governance and erratic decision-making.

Gloria also deflected blame for the chaotic way enforcement began Monday, when city officials raced to put stickers about resident discounts on parking kiosks and lobbied a vendor to deliver crucial missing signs.

The mayor said the council had “shaped, amended and approved” paid parking in Balboa Park and contended an accelerated timeline chosen by the council made it hard for his administration to implement it flawlessly.

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The mayor’s memo came in response to a Tuesday memo from Councilmembers Kent Lee and Sean Elo-Rivera in which they called implementation of paid parking “haphazard” and “not ready for prime time.”

Lee and Elo-Rivera said the process for city residents to get approved for discounts was so complex, cumbersome and confusing that Gloria should waive fees for residents until they have had time to adapt and learn.

While Gloria rejected that suggestion in part of his memo, he later said “enforcement remains focused on education, not punishment, during this early phase, to ensure park users are aware of the new parking fees.”

Dave Rolland, a spokesperson for Gloria, said Thursday that no specific date had been set for when the city would shift from education to enforcement. But he added that “about a month” would be an accurate timeline.

City officials have already corrected one key mistake: Signs that were missing Monday — alerting drivers that the 951-space lower Inspiration Point lot is free for three hours — have since been installed.

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Lee and Elo-Rivera in their memo decried “an inadequate effort to educate the public on how to use this new system.”

They said San Diegans had not been clearly informed about when a portal for city resident discounts would go live or how to use it.

And they complained that residents weren’t told they couldn’t buy discounted parking passes in person, or when enforcement with citations would actually begin.

City residents must apply for discounts online, pay $5 to have their residency verified, then wait two days for that verification and choose the day they will visit in advance.

Lee and Elo-Rivera called the city’s efforts “a haphazard rollout that will surely lead to San Diegans missing out on their resident discount and paying higher parking rates than they have to.”

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Gloria said the city collected $23,000 in parking fees on Monday and Tuesday and another $106,000 in daily, monthly and quarterly passes — mostly from residents who get discounts on such passes.

“Early data shows that the program is functioning and being used,” he said. “These are not the metrics of a system that is failing to function. They are the metrics of a system that is new, actively being adopted, and continuing to improve as public familiarity increases.”

While Gloria conceded that some improvements are still necessary, he rejected calls from Lee and Elo-Rivera for a suspension, citing his concerns it would jeopardize city finances and confuse the public.

“Your proposal to suspend paid parking for residents two days into the new program would have immediate and serious fiscal consequences,” Gloria said. “This reversal could introduce confusion among park users and would disregard investments already made to establish the system, potentially compromising the program’s effectiveness.”

Paid parking in Balboa Park is expected to generate about $3.7 million during the fiscal year that ends June 30, but revenue is expected to rise substantially when the fees are in place for a full fiscal year.

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Gloria said the money is a small part of the city’s overall solution to recurring deficits it faces of more than $100 million per year.

“What we will not do is reverse course days into implementation in a way that undermines fiscal stability, creates uncertainty, and sends the message that addressing a decades-old structural budget deficit that has plagued our city is optional because it is politically uncomfortable,” he said. “That kind of erratic decision-making is not good governance, and San Diegans deserve better.”

Meanwhile, a spokesperson for the San Diego Zoo said Thursday that paid parking there has continued to go smoothly since it began on Monday.

The zoo, which is using Ace Parking for enforcement, opted for immediate citations instead of an educational grace period.

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San Diego, CA

Barricaded individual in custody following police response in Mission Valley

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16 hours ago

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January 8, 2026

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Barricaded individual in custody following police response in Mission Valley


SAN DIEGO (FOX 5/KUSI) — San Diego Police responded to a barricaded individual in the Mission Valley area Thursday afternoon, prompting a heavy law enforcement presence.

  • The Nexstar Media video above details resources for crime victims

The department confirmed around 1 p.m. that officers were on scene in the 1400 block of Hotel Circle North, and are working to safely resolve the situation. Authorities asked the public to avoid the area and allow officers the space needed to conduct their operations.

Police described the incident as a domestic violence restraining order violation. At this time, it’s unknown if the person is armed.

No injuries have been reported.

The suspect was taken into custody within an hour.

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Further details about the barricaded person were not immediately released. Police say updates will be shared as more information becomes available.

This is a developing story. Check back for updates.



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San Diego, CA

Padres roster review: Luis Campusano

Published

1 day ago

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January 8, 2026

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Padres roster review: Luis Campusano





Padres roster review: Luis Campusano – San Diego Union-Tribune


















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LUIS CAMPUSANO

  • Position(s): Catcher
  • Bats / Throws: Right / Right
  • 2026 opening day age: 27
  • Height / Weight: 5-foot-10 / 232 pounds
  • How acquired: Second round of the draft in 2017 (Cross Creek HS, Ga.)
  • Contract status: Will make $900,000 after agreeing to a one-year deal to avoid arbitration; Will not be a free agent until 2029.
  • fWAR in 2025: Minus-0.4
  • Key 2025 stats: .000 AVG, .222 OBP, .000 SLG, 0 HRs, 0 RBIs, 0 runs, 6 walks, 11 strikeouts, 0 steals (10 games, 27 plate appearances)

 

STAT TO NOTE

  • 1 — The number of plate appearances for Campusano while in the majors between June 1 and June 13 and the one at-bat resulted in a weak, pinch-hit groundout against a position player (Kike Hernandez) on the mound in mop-up duty. Campusano was recalled to the majors four times in 2025 but did not get a real opportunity get settled after he went 0-for-6 with four walks and a strikeout in three straight starts as a DH in early May. Of course, hitting .227/.281/.361 with eight homers over 299 plate appearances after getting the first real chance to start in 2024 likely informed how the Padres viewed his opportunity in 2025.

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