Craig and Linda Barkacs, teachers at University of San Diego, moved to Downtown to enjoy the electricity and views of the city and ocean. (photo/alandeckerphoto.com)

Diamonds found in nature are rough around the edges and must be cut and buffed to bring out their hidden beauty. The same can be said about Downtown San Diego. It has taken 30 years, but the Centre City Development Corp., with a few billion dollars of private sector investment help and a couple small fortunes lost, has polished the Downtown area. “We had a diamond in the rough,” says Peter Hall, president and COO of the agency for the last 10 years. “Its brilliance and sparkle are now seen.”

Downtown living is on the verge of many milestones. Recently recognized was the 5,000th condominium buyer since 1999. A record 3,800 people are expected to move into new Downtown dwellings in 2005 and sometime this year the 30,000th resident will call the urban core home.

“The pace of new residents over the past few years is running over 10 times our historical average for our first 25 years of redevelopment efforts (1975 - 2000),” Hall says. “In 2004 alone, over 2,000 new units were completed (nearly a third of the entire city’s new production). The significance of finally having a great housing initiative work for our Downtown is that we are implementing a smart growth strategy that will benefit and be a model for the entire region. It is our future. All this has come together as we look forward to celebrating 30 years of focus and work toward repositioning our Downtown as the heart of the region and the soul for its future residents.”

Official counts show 14,313 living spaces Downtown. Most rental units and for-sale condos have waiting lists. Just five years ago owners were few and, outside a few blocks of the Gaslamp Quarter, the activity was a Monday to Friday 8 a.m. to 5 p.m. thing. Today real estate agents track about 3,000 active rentals, 2,500 new generation condos and about 1,300 condominiums built in the early 1990s and prior. It is a mixed population, ranging from the wealthy Rancho Sante Fe refugees to nearly 1,700 seniors in assisted living units, 4,900 occupied SRO units and nearly 1,000 other subsidized units.

The numbers all add up to a real residential downtown.

“The reality is here,” says Russ Valone, president of MarketPointe Realty Advisors.

Valone also notes that Downtown’s new neighborhoods are still in growth mode. Under construction are nearly 3,000 units in about 15 projects that should start seeing move-ins this year. “That is going to bring us another 3,800 inhabitants in new dwellings,” he says. “And this is just beginning. There are about 600 units to sell in active projects and another 500 units in Icon and Alta, which are going to be building next year.”

Still, residential success for Downtown is measured by more than square footage. “The real litmus test is feet on the street,” Hall says. “It’s not about concrete in the sky. The real goal about this — to create community, to create smart growth — you’ve got to have people and you’ve got to have them where they can live, work and play. Every time we add more people Downtown or another unit, we keep moving in the right direction on smart growth.”

Who’s Moving In

The cleanup and new restaurants and retail that followed development made Downtown more appealing to Linda Barkacs, 43. Her husband, Craig, 48, had spent 15 years trying to interest her in Downtown. The couple has lived together in San Diego between a large home in Alpine and a condo in Rancho Bernardo since 1981. The excitement and simplicity of living in the middle of the city enticed Craig. But Linda was resistant, citing safety reasons and a lack of interesting housing options. Her impressions have changed. “I feel now it’s a place I can feel safe living,” she says. “The number of residents has increased and the amount of retail and commercial has increased. Things are open longer and there are more conveniences. I feel safer.” She also began seeing more options in housing. Open space lofts didn’t appeal to her or fit their lifestyle. But as developers rolled out a variety of product, the couple began to see units they liked. Then they had to get over sticker shock. “What I thought I was willing to pay to live Downtown versus what I had to pay were way out of proportion,” Linda says. Then they discovered the Grande on Pacific Highway. “Of the residential towers Downtown, it’s the closest to the water,” Craig says. “From a walkability standpoint there is Seaport Village, Horton Plaza, the Gaslamp, the ballpark and Little Italy, all within a mile.” Not to mention the dual water/city view they snagged that was so good Linda gave up a room.

They see their reasons to live Downtown growing daily. “Downtown is becoming so vibrant,” Craig says. “There is so much renovation, activity.” Self-described “recovering lawyers,” the Barkacs teach at the University of San Diego. Living closer to work and the option of taking the adjacent trolley to work intrigued them.

The speed of Downtown development is amazing, even to insiders. Hall says the typical master-planned community will have 1,500 to 2,000 houses and take five to 10 years to build out. “We are doing one of those — a piece of residential development that is equal to one master-planned community — a year,” he says. “I think that is just wonderful for our region, the city of San Diego and is surely making a big difference in our Downtown.”

On The National Radar

It is not just San Diegans who are relocating to the Centre City.

Bronson Byi, 30, will be moving to a home in Trellis from New York City sometime in February or March. He is excited about the prospects. “With all of the real estate development, resource commitment and an emerging cultural nightlife, it’s difficult not to have high expectations for the area,” he says. “San Diego on the whole is already a premier destination area for most of the populace due to its seemingly perfect climate, proximity to the water and a diverse mix of people. Coming from New York, I’ve become accustomed to the metropolitan scene and am drawn to downtown areas because of the vivacity you feel just by being a part of a diverse group of people from all walks of life. In addition, I am a big fan of baseball, and being steps away from Petco (Park) just further adds to my anticipation.”

Byi is a securities trader and is moving to San Diego because of the Southern California way of life “with the weather, the water and a generally more laid-back environment.” He heard about the Downtown development phase while visiting San Diego on a business trip about two years ago. After looking at several projects, he chose Trellis because he liked the location and design of the building. “It also was not as big as some of the other properties I saw, which ultimately made me feel like it would be difficult to feel a part of a community.”

Pumping Up The ‘C’ Word

Community is a big part of the Downtown plan. All 1,500 acres are stitched together with the history and character of each area. This historic character is most visible in the oldest neighborhoods, the Gaslamp Quarter and Little Italy. The ballpark is “fun and funky or hip and hot,” Hall says. The Marina district is quiet with very little commercial. In the area near City College, the character is still emerging, but Hall says the buildings will reflect its historic nature. Playing off the warehouses or industrial buildings that called the area home, the architecture of new homes will show distressed or exposed elements and steel framed windows along with some of the more adventuresome and diverse designs expected Downtown.

Sherm Harmer, chair of the Downtown Residential Master Marketing Program, predicts 2005 will be one of the most dynamic years in Downtown history. He foresees a big change in the fabric as the record number of residents attract new service and retail business. Already Harmer notes that virtually all the commercial space in the new buildings is taken. Those spots will be occupied this year by new postal services, tanning salons, dry cleaners, coffee shops, banks and real estate offices. A new Albertsons will start construction in the East Village and the redevelopment agency has approved a $225 million funding plan for 10 new parks and two new fire stations.

A Downtown resident, Harmer resides a block from his office and can walk to just about everything. It is common for him to go a week without driving his car.

Hall likens the development of Downtown to a three-legged stool. The dining and entertainment leg is well under way and the residential leg is completed. “We are no longer worried how to get a housing initiative going here,” he says. “It’s going great guns and we are back concentrating on jobs. Smart growth requires a balance between housing and jobs. For the first time in 15 years office projects are planned with four new office buildings in the pipeline.”

At the west end of Downtown is the 400,000-square-foot 655 Broadway project, which celebrated its topping out in December. It will see tenants a year from now. Under construction at the east end is Smart Corner, a 100,000-square-foot office component to a mixed-use project with retail at its base, a small office tower, a large residential tower and a new four-car trolley station through the heart of it. “Ergo, that’s about as smart as you can get when you talk about smart growth,” Hall says. “You could live there and never have to step over the sidewalk. You’d never have to use your car if you didn’t want to.”

What used to be one of the toughest areas of the city — the old convenience store had earned its “Stop & Stab” nickname — will be tomorrow’s smartest corner. Prices start at less than $200,000 and preference will be given to interested buyers who work Downtown. “There are so many things smart about it we should have called it Einstein Corner,” Hall says.

A fair number of investors are buying Downtown. Some are renting out their units for a few years until they are ready to move Downtown, some are speculating. Hall views this scenario as a positive because it provides rental stock. “Historically, Downtown was only rental,” he says. “Then it became 50/50. Today it is about 60/40. About 25 percent of (the units) are being bought and being rented back into the market. Rents are less expensive than purchases of the same unit for most people. There is no vacancy Downtown in rental or for-sale units. There is an undersupply of housing for all types everywhere and for Downtown this means there are waiting lists.”

In the case of the Barkacs’ purchase at the Grande, the couple note two other buyers were prepared to step in on the day their first payment was due. “And that was just for space in the air 31 stories up,” Linda says.

Like a diamond, Downtown has many intricacies with all the people who live, work and play there. CCDC wants to celebrate these facets and the strength of the gem it has created. Hall says CCDC plans to have a progressive party throughout the year to celebrate its 30 years of determination and success. A record number of newcomers are available for the party.