Broadway 655 developer Rob Lankford invites a street view of the 23-story office tower at Broadway and Kettner Street. (photo/alandeckerphoto.com)

Ending years of anticipation and drama, Downtown’s new office tower, Broadway 655, has opened its large glass doors and begun ushering businesses into the 23-floor building on the corner of Broadway and Kettner.

With its stupefying views of Downtown and the bay, a modern atrium and space for a world-class restaurant, Broadway 655 is the first new office building to open in the Centre City since 1991. Although the grand opening party won’t be held until December, two law firms moved in during the last week of September.

“It’s a welcome sign for us to have a project like this,” says Derek Danziger, spokesman for the Centre City Development Corp. “It means the office sector is finally picking up pace.”

Since 2001, the number of people living Downtown has nearly doubled, reaching 29,000 this year. With dozens of condominium projects in the pipeline, Downtown’s residential population is projected to grow to 80,000 by 2010.

So far, the number of jobs Downtown hasn’t grown to match the population.

“It’s important to have a balance between housing and jobs,” Danziger said. “Some people are already living and working here but it will take this type of office development to add new jobs.”

Built with granite and glass, the building features a glass-wrapped restaurant space at the corner, so diners will be able to see the Santa Fe Depot, the trolleys and look toward the bay. The tower offers breathtaking views all around, with south and east walls facing the bay. Apartments on the south side have an unobstructed view of the bay.

“We can promise people that they will be able to keep their views, since most of the surrounding area is already developed,” says developer Rob Lankford. “It’s a great spot, at the edge of the bay but with great access to the courthouses and Downtown businesses.”

About half of the building’s 14,000 square feet of retail space is in leasing negotiations with a jeweler, a coffee shop, a deli, a day spa and a bank looking at the space, he says.

The building also offers broadband and fiber optics capabilities, and energy-efficient heating and cooling systems.

So far, the 410,000-square-foot building, with 765 parking spaces, is about half leased, reports Ed Muna, a senior vice president for Lankford & Associates. Along with three law firms on nine floors, Five Star Parking and Webcor Builders have signed five-year leases.

“Our new tenants were already located Downtown and had become landlocked in their existing space,” Muna says. “This move allows them to grow without Downtown being threatened with the loss of their business.”

Before the opening of Broadway 655, Downtown office buildings had an 8 percent vacancy rate, which restricted growing companies from acquiring workspace.

Lerach, Coughlin, Stoia, Geller, Rudman & Robbins now has the top seven floors of the 23-story building, complete with an internal stairway that runs through most of the floors. The firm had subleased its One America Plaza offices from the former Gray Cary Ware & Freidenrich, now Piper Rudnick, but had outgrown that space.

“It’s a growing firm and they had gotten landlocked,” Muna says. Piper Rudnick is moving into the Downtown space that Lerach Coughlin vacated.

Peterson & Price was the first firm to move into Broadway 655. The move allows it to consolidate its Carlsbad office and bring new people into the 47-year-old firm, which specializes in land use, real estate, business and corporate law.

The law firm of Best, Best & Krieger began moving in Oct. 1 from a space it had outgrown, Muna says. “By accommodating the firms’ growth, we can add good jobs to the Downtown area,” he says.

Two more Class A projects, the DiamondView Tower and MetroWork are expected to open Downtown in 18 months.

DiamondView Tower, slated for completion in spring 2007, is a 14-story project adjacent to Petco Park being developed by Cisterra Partners LLC. With about 72,000 square feet of retail space in the 308,000 total square feet, the building includes a second-floor fitness club and a swimming pool. Most floors have views of the ballpark, as well as of Downtown and the bay. Cisterra began construction on the building, which is 33 percent leased, in June.

MetroWork, scheduled for completion in September 2006, will bring 60,000 square feet of office-loft space and 20,000 square feet of retail space between Little Italy and the Downtown core. Developer Howard Berkson broke ground on the $23 million project in November 2003 and is selling the loft-style condominiums. The nine-story building will hold 27 live-work spaces as well as ground floor retail space.

Broadway 655, view of the 23-story office tower at Broadway and Kettner Street. (photo/alandeckerphoto.com)

Developers and commercial realtors are keeping an eye on how Broadway 655 is filling up and out. Since commercial projects usually need to have 50 percent of the space leased to obtain financing, Broadway 655 seems off to at least a promising start. Also, there is a dwindling supply of premier sites for office construction Downtown. Residential developers have snapped up much of the best land, adding one more layer of complexity to adding new office space.

Institutional investors remain impressed with the potential earnings of Downtown office buildings, says Kraig Kristofferson of CBRE, which represents Cisterra at DiamondView.

“They see the potential for good rental returns and they view the area as a growth area,” Kristofferson says. “In the past two years, 10 different buildings have been purchased by investors, some twice, and each time people have made money.”

The San Diego Regional Economic Development Corp. also is working to recruit national corporations to Downtown, focusing on lifestyle as well as amenities. “We have targeted financial service and insurance companies, technology firms that don’t require a massive infrastructure and the kinds of companies that are already here,” says Andrea Moser, the vice president for marketing, communications and research. “Downtown is attractive for businesses because it’s become a 24-hour destination.”

Two government buildings, a 450,000-square-foot federal courthouse at Broadway and Union streets, and a state office building scheduled to begin construction one block west of the existing state office building at Front and Ash streets are on the immediate horizon Downtown.

The introduction of new office space may also shore up what many see as relatively inexpensive rents at other buildings, some commercial realtors say.

“These buildings bring great new options to tenants, great views, access to a lively downtown and lots of parking,” Kristofferson says. “Because this is new construction at new construction costs, the rents will be higher and it will raise the ceiling on existing rental rates. The new buildings make it more appropriate to ask for more appropriate rents in the older Class A space.”

Rents are competitive with University Towne Centre and Del Mar Heights even if the cost of parking is included, Kristofferson says. Rates are low for the quality of the buildings.

“If I were a tenant, I’d be trying to lock in rates because we believe they will rise,” he says. “National institutional investors are buying Downtown buildings because they see the potential for good rental returns.”

Others have their doubts whether there is enough demand to meet supply, including broker Jason Hughes of Irving Hughes, which exclusively represents tenants.

“Time will tell if this building will be successful,” Hughes says. “The office space market will get softer as all the new square footage comes on line, and we’ve got almost 300,000 of existing Class A opening up soon. That means there’s lots of other options. And tenants – particularly those not tied to Downtown – will look elsewhere if the prices and the parking costs too much.”

In the short term that won’t be an issue, especially come December when Downtown’s shakers gather to celebrate the end of a 14-year drought in office tower openings.