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![]() Attorney Charles Black gazes out a huge office window 20 floors above Downtown, takes in the stunning city and harbor views, and smiles. “I think the general picture for San Diego’s future is pretty bright.” That is more than can be said for the weather. The day is cloudy and overcast with some half-hearted drizzle coaxing windshield wipers into action far below. But up at this level panoramic views still beckon in all directions. Not that Black, a real estate and land use specialist with Gray Cary Ware & Freidenrich, is much interested in this view. He’s looking much further away 25 years away.
“There are some big policy issues on the plates of San Diego’s elected officials,” he says. “Congestion, urban limits and what this city is going to look like by 2025.” Black believes the pattern of development has to change. “San Diego is a very large city in terms of area,” he says. “In the past growth has been horizontal, into surrounding cities and the county, which has made a lot of people dependent on their cars. “I hope over the next 25 years we’ll densify some existing areas areas well served by the trolley and buses, those close to significant job centers, and through vertical development, the Downtown area.” Black is closely involved in several Downtown projects, including the new ballpark and East Village complex and the Horizons twin towers, which together will add significantly to the area’s commercial, retail and residential space. He expects developments like these to reverse the trend of recent years by encouraging employers to move from the suburbs to Downtown, bringing with them mostly young, well educated workers who are happy to live in an upscale, inner-city environment. It turns out the best time to interview Timothy Tosta is while he is driving to work at the San Francisco offices of Baker & McKenzie at 7:30 in the morning. What he sees out the car window suddenly illustrates the very point he’s been making. “This area is just so cool now, but 20 years ago people were very wary of what would happen here.” Tosta is talking about change. “People abhor change,” he says. “They are resistant to change, they really hate it. And one of the most tangible changes is on the ground, to the physical environment.” Tosta describes himself as an agent of change through his involvement in real estate, construction and development projects across the state, including here in San Diego. He says the key to overcoming fear of change is planning, vision and strong community leadership. But it’s not always easy. Some old, outdated zoning categories were established years ago to separate antagonistic land uses when California was largely industrialized. Tosta says the advent of new technology means communities are now finding reasons to keep people’s homes and workplaces closer together. Technology today is cleaner and less intrusive, people are working longer hours and they don’t want to commute on traffic-clogged freeways. “When I look at all the traffic in San Diego it suggests to me that a lot of things there are in the wrong place.” Pointing to a scarcity of affordable housing, Tosta warns that San Diego risks pricing itself out of the market. That’s a concern shared by Gray Cary’s David Watson, whose perspective also reflects his role on the San Diego Regional Chamber of Commerce housing committee. Watson says with a predicted population growth of 900,000 over the next 20 years, San Diego will need about another 360,000 housing units, but with space for only 260,000, the city is facing a significant shortfall. This can only put added pressure on house prices Watson quotes a current median price of $290,000 which could turn people away, leaving some areas of the local economy facing the prospect of labor shortages. Watson, who has served on the San Diego Planning Commission, the ballpark planning task force and the Mid-City Development Corp. board, says the answer is “smart growth.” Rather than in-fill at random, this means planned density development going hand in hand with improved public transportation and funding to upgrade the infrastructure in some older neighborhoods. Watson acknowledges that with so many areas targeted for growth, opposition is likely, as are possible lengthy legal challenges. “My concern is that less affluent areas don’t have the resources to protect themselves,” he says. “It’s not always a fair fight.” Watson, who worked as a newspaper journalist for six years before turning to law in the mid-’80s, hopes local housing needs may be helped by last month’s California Supreme Court decision making it harder for homeowners to sue builders over construction defects. The prevalence of such lawsuits has had a chilling effect on condominium construction in particular, and Watson thinks this ruling may spark a building resurgence. Christopher Neils certainly hopes so. He says condos help people bridge the gap between apartment living and buying single family homes, and so play a vital role in meeting San Diego’s future housing needs.
Neils has been practicing law since he left the Marine Corps almost 30 years ago, the last 14 of those years primarily in real estate development with Sheppard Mullin Richter & Hampton. He foresees major problems, such as people having to commute 60 to 90 minutes each way to work with resulting Los Angeles-style gridlock “unless we can develop more housing within urban areas.” The key to that, he says, is to change planning and zoning restrictions to allow for density development for example, by increasing the height limits on residential buildings close to established transportation arteries. Technology today is cleaner and less intrusive, However, the area’s housing needs are only part of an overall regional strategy that Neils would like to see in place. “San Diego is at an important crossroads and decisions need to be made now for the future welfare of this city.” Drawing on his legal experience and his role as vice-chairman (recently elected chairman) of the Chamber of Commerce public policy division, Neils lists infrastructure improvements that would benefit residents and businesses alike. These include roads, water supply and a new airport, plus improved facilities to shift goods more effectively by air, sea, road and rail all things that require vision, long-term planning and a regional focus. “It’s a daunting task, but the opportunity is there for wise decisions to be made now which will benefit the region in 50 to 70 years’ time,” he says, noting that San Diego now has a new mayor and several new council members. When things go wrong in real estate or construction projects, from hospitals, hotels and high-rises to dams, pipelines and processing plants, those involved often turn to Peter Ippolito.
A partner in the San Diego office of McKenna & Cuneo, Ippolito has been representing owners, builders and public agencies in construction litigation for about 35 years. He gets called upon to sort out large-scale, complex cases concerning issues such as costs, alleged malpractice, defects, collapses and other failures in consumer expectations. Although he’s in the business of construction litigation, Ippolito says only about 5 percent of cases go to trial. The vast majority are settled without litigation, and that pleases him. Experience has taught him it often is in the client’s best interest to accept compromise and seek an early settlement, even when they undoubtedly have a winning case. “A courtroom is no place for a businessman to be,” says Ippolito. “It ties up people, money and assets. It’s a last resort and one, in most cases, to be avoided if at all possible.” Ippolito applauds the fact there are several options for settling disagreements before they reach court, including disputes review boards and mediation, the latter now written into city of San Diego construction contracts. Ippolito has been working as a mediator for about five years, dealing with between 30 and 50 cases per year, and although decisions are not binding more people are using this service rather than face drawn-out, costly court action. Ippolito firmly believes that prevention is better than cure, and tries to minimize mistakes or misunderstandings by helping clients prepare and understand the contracts they sign which “these days are like books.” Scott Biel, a partner in the San Diego office of Brobeck, Phleger & Harrison, is a leasing lawyer who specializes in the development of office, research and manufacturing facilities for electronics and biotechnology companies. He has clients throughout California, across the western United States, and in Europe and Asia, racking up hundreds of millions of dollars’ worth of work with industry giants like Cisco Systems.
Indeed Cisco has become one phenomenal success story for Brobeck, which began representing the company when it had just 40 employees; today Cisco employs more than 26,000 people worldwide. It is not surprising that Biel, who is on the feasibility committee looking to establish a regional technology park for San Diego, tends to focus on the big picture specifically on large parcels of real estate in accessible parts of the county. And when he considers what’s available he’s a little disconcerted to find there are not many contiguous sites that would meet the demands of a large company looking to consolidate its corporate campus here. While a shakeout of dot.com companies has led to some vacant space coming onto the market, Biel says this has been readily absorbed by neighboring tenants. He says some cities and states are more pro-growth than others and San Diego and California have to be alert to fierce competition from places like Texas, New England and North Carolina. He reckons San Diego does a good job of trying to attract and keep companies here, but wonders if more should be done to anticipate real estate relocation and expansion needs, and to assist in finding suitable sites. Eric Kremer saw the Southern California property boom of the late ’80s from a different perspective he was in Tokyo for about a year brokering deals for wealthy Japanese investors wanting to buy here. Today, as a partner in the San Diego office of Pillsbury Madison & Sutro, and still heavily involved in the real estate sector, he views the property market as more broadly based and less volatile.
One reason is that San Diego now is more restrained by the availability of commercial and industrial land and buildings. First to take the space was the biotechnology companies, then wireless and telecommunications moved in, snapping up land and pushing up prices. “It’s now more difficult for start-ups to find affordable space in key locations," says Kremer. This means looking further afield south in the corridor between National City and San Ysidro, or in areas like Santee and Ramona. Although real estate prices have increased dramatically, Kremer says San Diego is still “incredibly cheap” compared to San Francisco and Silicon Valley. However, unlike some observers he doesn’t see this area becoming the next Silicon Valley. While some of the elements already are here, for example a highly skilled workforce, he says San Diego has too many other competing uses such as the military and tourism. On top of that are the feelings and attitudes of those already living here. “Lots of people have a sense,” he says, “that San Diego has gotten big enough.”
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