Among San Diego’s Downtown builders, Catellus Development Corp. is particularly blessed. The company owns 15 acres of prime land near the waterfront, the former property of the Santa Fe Pacific Railroad. But what Catellus doesn’t have is a crystal ball. When the economy tanked in the early 1990s, Catellus was blindsided and its elaborate construction plans derailed. Instead of new buildings rising up next to its Santa Fe Depot, the company wound up installing a golf driving range — at least temporarily. It even offered two of its blocks as a site for a new central library.

Now that the Downtown is booming again, Catellus is back on track with its development plans. The golf range has been removed in preparation for construction of high-rise condominiums. And Catellus has withdrawn its offer of a library site on its property at Pacific Highway and Ash Street. “We just felt that the highest and best use for the other site was not the Downtown library,” says William Scott, Catellus Urban Development Group’s senior vice president for San Diego development.

Catellus is once more thinking big. The company is betting that the timing is right to emerge from its years of dormancy and move ahead with construction of a mix of office and residential projects, in all 3.3 million square feet. In late 1999, Catellus hired Scott to head the effort to develop the land around the Santa Fe Depot. A project team assembled to move the effort forward includes Daniel Mann Johnson Mendenhall, an architecture firm; the Olin Partnership, urban planners; and Project Design Consultants, civil engineers.

Echoing the grand scale of its earlier shelved plans, the developer still envisions a new complex of eye-catching high-rises that will form a grand entrance into Downtown San Diego. “San Diego’s skyline is going to be redefined in an exciting way,” says Scott. “It is certainly going to bring a lot more activity to the west end of Downtown.” At the heart of these towering new buildings will be the historic Santa Fe Depot, which Catellus also owns and operates.

The latest incarnation — the Santa Fe Place master plan — is not a carbon copy of the previous one. It is being reshaped to reflect the prevailing market conditions, Scott explains. For instance, its residential component is a direct result of the current Downtown building boom. Scott says that BOSA Development Corp. of Vancouver approached Catellus about buying part of its property on Pacific Highway for a pair of luxury condominium towers.
Catellus agreed and recently entered into a purchase and sale agreement with BOSA. Each 39-story, 425,000-square-foot tower will have 220 units and 420 below-grade parking spaces. Scott says escrow on the two towers is due to close later this year. The first tower will be ready for occupants in the summer of 2003.

In past years, Catellus has developed residential itself, an example being the Seabridge apartments at G Street and Pacific Highway. Today it is focusing on commercial, opening opportunities for deals like the one with Bosa. “We have been exiting the residential end of the business so it didn’t make sense to do it ourselves,” says Joel Mayne, Catellus vice president of leasing and development in San Diego.

One possible Catellus development was never contemplated a decade ago — a suburban-style plant designed for high-tech companies. If built, the large-floorplate building — up to 90,000 square feet in one track-spanning configuration —would go up on the north end of the Santa Fe property, the Pacific Highway site previously considered as a library site. Catellus already is developing a high-tech structure in a 303-acre project it is building in the Mission Bay neighborhood of San Francisco. Scott says that Downtown is increasingly attractive to high-tech companies, whose employees are fed up with suburban traffic and attracted to the new housing opportunities and amenities of the Centre City. But the high-tech concept is not a certainty. Depending on the Downtown market, Catellus may go with a hotel or a residential project. “The market is always changing and it is our task to always address the needs,” says Scott.

Two other high-rise office towers — the kind more traditionally built Downtown — are part of the proposed Catellus development mix. One Santa Fe Place, north of Broadway, would rise 440 feet, becoming the first Class A office tower built in San Diego in more than a decade. Construction of the 27-story, 457,964-square-foot building would begin in the first quarter of 2002. The second tower, 20-story Two Santa Fe Place, would go up on the south side of Broadway. The structure would be 322 feet high and have a rentable building area of 373,908 square feet.
Scott says Downtown rents, which fell to untenable levels for Catellus in the recession of the early 1990s, have begun to creep up again. By the time One Santa Fe Place opens to tenants in 2004, Downtown office rent should have risen enough — the target is $3 a square foot — to sustain Catellus’ office construction projects.

The Santa Fe Place Master Plan guides the company’s development on the former railroad property around the historic Santa Fe Depot, which Catellus also owns and operates. Development is slated to occur on six city blocks north and south of Broadway, including five city blocks bounded by E Street on the south, Pacific Highway on the west, Ash Street on the north and the railroad right-of-way to the east. The site also includes portions of the blocks between Ash and B streets on Kettner Boulevard and the 2.5-block Santa Fe Depot on Kettner between B Street and Broadway.

Catellus came into existence in 1984 as the real estate operating subsidiary of Santa Fe Pacific Railroad. In December 1990, the company was spun off to the common stockholders of the Santa Fe Pacific, taking with it the vast land holdings of the parent railroad company. In California alone, Catellus holds a rich portfolio of property in San Diego, San Francisco and Los Angeles along with suburban property formerly owned by the railroad.

The first Santa Fe Pacific development agreement with the city of San Diego was negotiated 17 years ago. It was amended in 1993.

But after a false start in past years, Catellus is convinced this time its ambitious building plan will steam ahead. “Now is an appropriate time to make a major investment,” says Scott.