San Diego, CA
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.
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
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.
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
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
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.
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:
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
ARLINGTON, Texas — Padres players from time to time wear T-shirts with a cartoon Jurickson Profar on the front doing his base hit celebration.
The cartoon Profar is smiling, and his arms are raised with his elbows bent and down to form the top of a heart over his head. On the front of his jersey is the word, “RELEVANT.”
The shirts were made in response to the poetically ill-timed response in a postgame interview by Dodgers catcher Will Smith in April.
In the fifth inning of the middle game of a three-game series at Dodger Stadium, Profar took exception to an inside pitch from Gavin Stone and let Smith know he was not pleased. The benches cleared, though nothing more than a little shouting and a lot of standing around happened.
After the Dodgers’ victory that night, as Profar was acknowledging he had been wrong to think Stone was throwing at him because he had squared to bunt, in that the pitcher had a perfect game at the time, Smith was saying this to the Dodgers’ flagship radio station:
“I don’t know why we would have thrown at him. He’s kind of irrelevant.”
The next night, Profar’s bases-loaded double in the seventh inning drove in the deciding runs in a 6-3 Padres victory.
Profar has always downplayed the incident, and there was no apparent ill will when the Padres and Dodgers played in May in San Diego.
Now, the two players are on the same team in the All-Star game.
They had not talked as of early Monday.
“It doesn’t matter,” Profar said. “It’s going to be OK. He’s another baseball player. He’s not the enemy. I have seen enemies in front of me before. Really, really enemies in Curacao. Will Smith is a baseball player.”
Profar felt Smith did not mean what he said to be as disrespectful as it sounded. He also agreed that perhaps at the time, he could be viewed as irrelevant, in that he hit .236 for the Rockies in 2023.
Smith said Monday he didn’t really even mean to include Profar.
“That had nothing to do with it,” Smith said of Profar’s accomplishments as a player. “It was the situation only. My bad. It was nothing personal. … He’s fiery, plays hard. He’s a competitor. In competition, the best and worst comes out of us. He’s a competitor and a good player.”
Profar seemed most perturbed that some seem to think it was Smith who got him going on his way to what is so far the best of his 11 seasons in the major leagues.
“People say it was him that lit a fire,” Profar said. “It wasn’t him.”
Profar has talked many times over the past few months about his love for the game and for the Padres and his desire to keep playing and prove he could be the player he has always felt he could be.
Profar arrived at spring training having signed a $1 million contract and knowing he was replaceable.
“With my contract,” he said Monday of his thoughts at the time, “obviously they are going to get someone (else) to play the outfield.”
Profar pretty much had it nailed. Signing Tommy Pham or making a trade for an outfielder was very much in play at the time. But the Padres decided during Profar’s strong spring that they could hold off on a move and focus their resources on acquiring pitcher Dylan Cease.
The reality, however, is the Padres signed the 31-year-old because they thought he believed in him as a leader and thought he would be useful enough in the outfield and at the plate. In no way did anyone believe he would be hitting .305 with an .870 OPS, be tied for the team lead with 14 home runs and starting in left field for the NL in Tuesday’s All-Star game.
“No,” Profar said with a hearty laugh. “Because they didn’t pay to believe.”
Profar has earned earned $300,000 in playing time incentives and is seven plate appearances from adding another $200,000. That would leave another $1 million that could be earned if he were to reach 600 plate appearances.
“I worked hard,” he said. “The hard work is paying off.”
Originally Published:
Here are some of the best things to do this week in San Diego, from Monday, July 15 to Friday, July 19.
Check back Wednesday for our guide to things to do this weekend.
Monday
Summer Organ Festival: The Spreckels Organ Society’s summer series continues with free Monday night concerts at 7:30 p.m. through Sept. 2. Next up on Monday: Organist Clara Gerdes. 2125 Pan American E. Road, Balboa Park, San Diego. Full schedule at spreckelsorgan.org/summer-organ-festival
Shark Summer at Birch Aquarium: For the month of July, the Birch Aquarium invites guests to celebrate “Shark Summer” and participate in activities that teach about these creatures that reside in our local waters. Shark feedings, kelp forest dives and meetings with shark specialists are just a few activities guests can experience at the museum to immerse themselves in the world of sharks. Guests are also welcome to explore other exhibits throughout the museum to learn about other neighboring ocean wildlife. 9 a.m. to 7 p.m. Monday. 2300 Expedition Way, La Jolla. General admission is $29.95, additional discounts available online and in-person. aquarium.ucsd.edu/events/shark-summer
J1 Karaoke Night in Pacific Beach: Singers can take the stage at Union Kitchen and Tap Pacific Beac for J1 Karaoke night. With over 100 people attending this Monday night, karaoke singers will face off in a competition to be crowned as the “Best Karaoke Singer of the Night.” As a prize, the winner will be rewarded with a $100 bar tab to use at the next event. 10 p.m. Monday. 832 Garnet Ave., San Diego. Early bird tickets are $7.18. eventbrite.com/e/j1-karaoke-night-union-pb-prizes-for-best-singers-tickets-940565836737?aff=ebdssbdestsearch
Tuesday
Twilight in the Park: The free summer concert season at the Spreckels Organ Pavilion continues with three mid-week concerts at 6:30 p.m., through Aug. 29. Next week, Ana “La Gitana” Group belly dancing on Tuesday; Pomerado Community Band on Wednesday; 3 Car Garage on Thursday. Balboa Park, San Diego. Schedule at balboapark.org/twilight-concerts
“Henry 6”: The Old Globe presents the world premiere of Barry Edelstein’s two-play adaptation of William Shakespeare’s three “Henry VI” history plays, which tell the story of England’s War of the Roses. “Part One: Flowers and France” and “Part Two: Riot and Reckoning” are playing in rotating repertory through Sept. 15. All performances at 8 p.m. Tuesdays-Sundays. Lowell Davies Festival Theatre, The Old Globe, 1363 Old Globe Way, Balboa Park, San Diego. $35-$116. (619) 234-5623, theoldglobe.org
Pacific Beach Tuesday’s Farmers Market: On Tuesdays, local farmers and small businesses gather in Pacific Beach for an outdoor market event to sell their own unique selections of groceries. Customers can find fresh produce, meats, cheeses, flowers, dips and spreads directly from the hands that made them. Alongside 14 certified farm vendors, San Diego-based vendors are encouraged to apply online to be selected to join the weekly grocery market. 2 to 7 p.m. Tuesdays. 901 Hornblend St., San Diego. Free entry. pacificbeachmarket.com
Trivia Tuesdays at Belmont Park: In collaboration with Sunset Trivia, Draft House in Belmont Park is hosting its weekly trivia night with an extended happy hour. Participating guests of the evening will test their trivia knowledge to compete for first, second and third place. At the end of the night, the trivia winners will receive restaurant gift card prizes to use at their next Draft House visit. 6:30 to 9 p.m. Tuesday. 3105 Ocean Front Walk, San Diego. Free. sdtoday.6amcity.com/events#/details/trivia-tuesdays-at-draft-at-belmont-park/10972440/2024-07-16T18
Wednesday
‘In Blue Time’ to debut at the Timken Museum: “In Blue Time,” a large-scale wall drawing created over the past month at the Timken Museum of Art by artist-in-residence Tatiana Ortiz-Rubio, will open Wednesday in Balboa Park. The drawing was inspired by the Timken’s 1557 painting “Parable of the Sower” by Pieter Bruegel the Elder. Derrick Cartwright, the Timken’s director of curatorial affairs, will discuss the work with Ortiz-Rubio at a preview event from 10 to 11 a.m. Tuesday. Tickets to the discussion are $15. The “In Blue Time” piece will be on display from Wednesday through Sept. 29. 1500 El Prado, Balboa Park, San Diego. Free. timkenmuseum.org
Pride interfaith service: St. Paul’s Cathedral in Bankers Hill will be the location for a special Pride interfaith service. Dean Penny Bridges and LGBTQ+ faith leaders will lead the service. Afterward, the cathedral will be illuminated in rainbow colors. The event is free and open to the public. 7 p.m. July 17. 2728 Sixth Ave., San Diego. sdpride.org/lightup
Dog Haus Celebrates National Hot Dog Day: By becoming a Haus member, visitors can claim a free hot dog at Dog Haus Biergarten in honor of National Hot Dog Day. Customers will have a variety of six gourmet hot dogs to choose from, each made with Creekstone Farms natural premium black angus beef and a King’s Hawaiian bun. The promotion does not require an in-store purchase but is limited to one hot dog per person. 8:30 to 10 p.m. Wednesday. 227 E Broadway, Vista. Free. vista.doghaus.com
“Tick, tick … BOOM!”: Cygnet Theatre presents Jonathan Larson’s semi-autobiographical musical about a young theater composer’s anxiety over not being a big success by age 30. 7 p.m. Wednesdays, Thursdays and Fridays; 2 and 7 p.m. Saturdays; 2 p.m. Sundays. Through Aug. 4. 4040 Twiggs St., Old Town San Diego. $30 and up. (619) 337-1525, cygnettheatre.com
Line dancing on Lapper Lawn: Thursday, find a free line dancing lesson at Lapper Sports Bar and Kitchen in Mission Valley. Learn how to move to classic country songs out on the lawn with the help of a DJ instructor. Food and drink specials will also be available for purchase off the dance floor which will all include free parking with validation. 6 to 9 p.m. Wednesday. 500 Hotel Circle North, San Diego. Free. towncountry.com/dine/lapper
Light up the Cathedral for Pride: St. Paul’s Episcopal Cathedral will be the place to watch a spectacle of rainbow lights decorating the church. Dean Penny Bridges, LGBTQ+ faith leaders and allied faith leaders will join together to celebrate faith and pride with an interfaith pride service. The hour-long service will include music from the San Diego Gay Men’s Chorus and San Diego Women’s Chorus, speeches from LGBTQ+ Faith leaders, and a presetation of the Light of Pride Award. Guests can watch the rainbow light display outside of the church and enter the Fellowship Hall where dessert will be served. 7 p.m. Wednesday. 2728 Sixth Ave., San Diego. Free. sdpride.org/lightup/
Thursday
“The Color Purple”: New Village Arts presents the musical adaptation of Alice Walker’s Pulitzer Prize-winning novel about Celie, an indomitable Southern Black woman in early 1900s Georgia. 7:30 p.m. Thursdays and Fridays; 2 and 7:30 p.m. Saturdays; 2 p.m. Sundays. Through July 22. 2787 State St., Carlsbad. $33 and up. (760) 433-3245, newvillagearts.org
21+ Night at WNDR Museum: Adult guests are invited to venture through different interactive art displays at the WNDR Museum for a 21+ night event. For extended hours, visitors can experience each installation to this month’s local DJ performance with DJ Mike Merrell. Bigfoot Corndogs will also be providing food and drinks available for purchase in the WNDR Lounge. All visitors must have a valid ID for entry and museum doors close at 9 p.m. 6 to 10 p.m. Thursday. 422 Market St., San Diego. General admission is $25. wndrmuseum.com/event/21-night-at-wndr-san-diego-july/
“The 25th Annual Putnam County Spelling Bee”: Lamb’s Players Theatre presents William Finn and Rachel Sheinkin’s audience-interactive comedy musical about five awkward adolescent contestants at a regional spelling bee. 7 p.m. Thursdays and Fridays; 2 and 7 p.m. Wednesdays and Saturdays; 2 p.m. Sundays. Through Aug. 18. Lamb’s Players Theatre, 1142 Orange Ave., Coronado. $38-$92. (619) 437-6000, lambsplayers.org
Friday
Spirit of Stonewall Rally: The Spirit of Stonewall Rally is an event that acknowledges those who contribute to the LGBTQ+ community through leadership, fundraising efforts and activism. The event will also have guest speakers and the raising of the Pride flag. The first Spirit of Stonewall Rally in San Diego was held in 1975. 6 to 7 p.m. July 19. 1500 University Ave., San Diego. sdpride.org/rally-2024
Southwestern Summer Shakespeare Festival returns:Southwestern College Theatre Arts Department presents its second summer Shakespeare festival with two alternating productions running July 19 through Aug. 4. This year’s plays are “Romeo y Julieta,” a bilingual version of “Romeo and Juliet,” and “Much Ado About Nothing” set at Southwestern College in the 1990s. “Romeo” will play at 7 p.m. July 19, July 27 and Aug. 2; and at 2 p.m. July 20, July 28 and Aug. 3. “Much Ado” plays at 7 p.m. July 26, Aug. 3 and 4; and at 2 p.m. July 21 and 27 and Aug. 4. 900 Otay Lakes Road, Chula Vista. $10. https://www.swctheatre.com/
Originally Published:
Re “Cost of gasoline in California is likely to soar” (July 5): When will Sacramento and Washington legislators wake up to the fact that the number of gasoline cars on our roads is decreasing every day? The old gas excise tax model is no longer fair or just as the only source of funds to pay for road repairs or building roads. The advent of EVs and bicycle lanes has changed the landscape forever.
Yes, “Californians pay the highest gas prices and endure some of the worst roads”! It is time to create a new tax system that taxes all of our road users fairly. All classes of vehicles, cars and trucks (gas, hybrid, electric, propane, etc.) and bikes (human-powered, electric and gas) should pay a new tax or fee based on road use. The more you are on the road, the more you will pay.
All bikes should be licensed for use on our roads, especially rental bikes. $100 a bike may help with road maintenance.
— Vince Loughney Sr., Oceanside
Originally Published:
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