A recent San Diego Union Tribune article on commercial real estate posed the question, “Headed for boom times?” in 2016. With tons of momentum and many reasons for optimism this year, it has Underground Elephant’s new creative office leading the way. An excerpt from the article is included below.
Commercial real estate in San Diego County saw some lower vacancy rates and higher rents in 2015, but a new trend gained strength — increased creativity in office, retail and industrial uses and design.
The CoStar Group reported slightly higher vacancies for office and retail, and a drop for industrial properties. Annual rental rates dipped 1.9 percent for retail and rose 4.5 percent and 4.8 percent on industrial and office, respectively.
And despite a healthy increase of 37,500 jobs countywide, new commercial construction at year’s end totaled only 2.9 million square feet, less than 1 percent of the total inventory.
But numbers aren’t everything, industry analysts and insiders say.
One need only step into the former T.R. Produce warehouse at Eighth Avenue and J Street in downtown San Diego to get a sense of the changing dynamics of the workaday world.
Underground Elephant, a digital marketing startup company with 98 employees, is pouring $3 million into the ultimate in creative office design. Basile Studio, mostly known for unique restaurant designs, has disrupted the usual office layout concept by fashioning a rural country town inside a brick facade.
When it opens this spring, the space will sport five, 100-year-old, transplanted olive trees and park benches, an old-fashioned school house for meetings, outhouse-looking restrooms and a sunken “living room” with shag carpet and plentiful power plugs and Internet connections.
“There’s a sense of demand for creative space like this,” said company spokesman Jarrod Russell. “It’s what the millennial generation aspires to work in. It’s great for talent attraction and retention, it’s great for a high-tech force. Companies, whether they’re a startup or a Fortune 500, are paying a lot more attention to culture, and you can’t build out a culture unless you have the office space to match.”
At ground level, Ralph Potter, Wells Fargo Bank’s Southern California vice president for construction equipment finance, looks out on the downtown skyline and sees 14 cranes in action, where none was evident during the recession. The bank’s construction industry “optimism quotient” dropped from a record 130 last year to a still optimistic 108 this year.
“I checked with my people today and they’re expecting this to be a very good year,” Potter said last week.
Several economic reports indicate the market might be poised for an upturn.
To read more, here is the full Union Tribune article.
Photo credit to Peggy Peattie / San Diego Union-Tribune.