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San Diego County is slipping south. After lagging over most of the last 30 years well behind North County in growth, the tables are turning and will continue to turn as South County will deliver the preponderance of units for San Diego’s foreseeable future.
The dividing line is Interstate 8. North of it is where most of San Diego County's growth has occurred. South of it growth has lagged. North County has been closer to the jobs, closer to Los Angeles, and in possession of a certain cachet associated with the good, affluent life.
South County is what we used to call south Bay. It’s just that most of what will occur down there has nothing to do with San Diego Bay, with the exception of the proposed Bahia Crystal resort in Chula Vista which will include a resort hotel, a new shopping center, commercial office/R&D and 600 to 700 attached residential units. The remainder of the projects are mostly in the eastern suburbs and San Ysidro, including:
- Otay Ranch: the mother of all projects due to end somewhere around 23,000 housing units with lots of commercial and a university thrown in.
- Rolling Hills: a project that is now gaining its legs under the ownership of Ford Motor Co. that will add 2,000 units.
- EastLake: a gorgeous master plan still growing will add about 4,000 units.
- Ocean View Hills: an assemblage by Pardee in San Ysidro that will grow to 3,600 units.
- Other smaller master plans, including Sunbow and San Miguel Ranch, which together will bring more than 4,000 units to South County.
When Growth Will Occur
These projects will bring about 37,000 housing units to the South County. The only real debate among policy makers and demographers is when. In discussions with South County developers, with the exception of the much larger Otay Ranch, most expect to deliver these units over the next 10 years, although policy makers are skeptical that they will achieve this pace.
San Diego County's population is just under 3 million, a figure that is expected to rise to 3.85 million by 2020, an increase of 45,000 persons per year. South County holds 274,000 persons but is expected to increase to 605,000 during the next 20 years, an increase of 16,500 persons per year. It will rise from nine to 16 percent of the county's population.
Another way of looking at this is that South County will capture 29 percent of total county growth over the next 20 years.
From a housing perspective, San Diego County's count is 1.075 million, a figure expected to rise to 1.4 million by 2020, an increase of 11,450 units per year. South County holds 111,000 units but is expected to rise to 225,000 during the next 20 years, an increase of 5,700 units per year. It will grow from 10 to 16 percent of the county's inventory.
What is more amazing about this growth is how it will occur. While there will be in excess of 500 projects delivering housing throughout San Diego County, South County will deliver its units in just 70 or so projects.
Price Gap
Why is this growth occurring in the South County? It basically comes down to land availability and housing prices. North County grew for many of the same reasons. Now things are different. The gap between housing prices in San Diego County as a whole compared with South County has been growing steadily during the '90s, and has widened dramatically over the past two years. The average housing price in the county (excluding South County) stands at $357,000, while the average housing price in South County is $239,000. This $118,000 gap is the critical reason for the rapidity of the growth we will experience in that market.
The potential opportunity of all of this inventory added under controlled, planned circumstances is an affirmation of what planning is today. Whereas 20 years ago the great planning debate was managing growth, a euphemism for delivering services and facilities (e.g. schools, roads, police and fire) concurrent with demand, today’s debate is smart growth, code word (I think) for creating higher levels of efficiencies in our metropolitan area.
There is no higher level of management than what is about to occur in South County. Policymakers and developers in Chula Vista and San Diego are fulfilling one part of their responsibilities to our community. Through master planning, they are insuring the highest quality neighborhood environments for families.
A Changing County
The next great challenge is to recognize that all of this growth will forever change the dynamics of the county. What was a San Diego once dominated by growth to the North, and traditional commuting from those northern suburbs to Downtown, Mission Valley and Kearny Mesa, will become a far more complex place.
Jobs will come to the South County, filling Otay Mesa and the surrounding master plans with new opportunities for people to live close to work. New commuting patterns will emerge, creating new challenges for transportation planners.
And undoubtedly there will be a pronounced increase of activity between the United States and Mexico as the megalopolis of San Diego and Tijuana converge through business and population interaction across the International Border. It is incontrovertible that in the coming years much of the economic growth in South County will relate to Tijuana's economic boom, particularly as it relates to the maquiladora expansion.
If the University of California, San Diego achieves its goal of securing an expanded campus at Otay Ranch, the economic potential of South County could match and exceed that of anywhere else in San Diego County because of the university's potential to catalyze new company formations and expansions.
The mosaic of what is and will be San Diego is growing more complicated. Regardless of the laudable goal for "smart growth" and emphasis for development in the existing urban communities, if most of the action is in master plans in South County, we ought to be prepared to address its externalities.
I find this to be the great challenge of planning throughout the county. The connections between the impact of several large projects in South County and the remainder of the metropolitan area will be manifested in new pressures on our entire urban system, including the need for new transportation, environmental and infrastructure solutions. The opportunity to plan for the connections has, for the most part, been missed as we have witnessed North County development, and even projects beyond our borders into Temecula.
The south will rise again. Hopefully what will rise with it will be a trend toward thinking about the opportunities that will be brought to the region through the development of entire new communities in a place that will be at the center of our attention for the next several decades.
Gary H. London is a real estate strategist and economist. His firm, The London Group Realty Advisors, publishes real estate information on its Web site at www.londongroup.com
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