Dennis Serraglio, Bosa’s director of sales and marketing, sees the Downtown housing market growing for larger, owner-occupied units. (photo/alandeckerphoto.com)

Expanding the supply of higher-end homes will play a key role over the next decade in convincing top executives and business owners that Downtown is a place to move or expand their companies, and for them to move nearby.

Executives like to live close to where they work. “Corporate execs tend to be the least commute oriented portion of the workforce,” says Russ Valone, president of MarketPointe Realty Advisors. Witness the explosive growth of Del Mar Heights, home today of the priciest commercial real estate in San Diego. Executives who work there are not only close to their homes, they are on the right side of the split between interstates 5 and 805.

But commercial development opportunities are dwindling and a number of studies say San Diego is running out of employment land. As that happens, planners say it will become more difficult for executives and owners of expanding companies to find affordable space that also is close to their homes.

If they move the business Downtown, that won’t be so much of a problem.

“While the executives would still choose to want to have their offices near these (North City) homes, they are not going to have a lot of ways to grow their businesses,” says Peter Hall, former president of the Centre City Development Corp. “They just won’t be able to get another floor or another building because there won’t be another floor or another building available.”

Downtown, on the other hand, is on the verge of a commercial real estate development boom. Led by the Irvine Co. with its 685,000-square-foot, Henry N. Cobb-designed tower at Broadway and Pacific Highway and Manchester Financial’s Pacific Gateway with about 1.6 million square feet of commercial real estate, the most desirable office space San Diego has ever offered is likely to come to market over the next 10 years.

Hall expects Irvine’s presence in the market, both with the new tower and in its fresh role as Downtown’s largest landowner, to attract fresh looks from technology companies with little need for manufacturing or lab space.

“An awful lot of our employment base could think of vertical campuses for their needs,” he says. “Companies like Irvine have so much clout and capability. They have a great reputation, great respect and access and credibility in the employer market place.”

The executive workforce also wants space and amenities. “They are not going to live in 1,400-square-foot condos,” says Valone. “They are going to want the 1,800-square-foot and larger units that are in the recently developed and new towers coming Downtown.”

Valone also notes growing numbers of young professionals, who are highly desirable to employers, are choosing to move Downtown. “You have a whole demographic there who have never nested,” he says. “They are all about lifestyle. They are making conscious decisions to accept higher densities in an urban environment. Some of them, a significant percentage, as they mature and have families, will fall prey to the suburban hell holes where they can raise their carpet rats. Others may opt to stay in the urban environment. That opportunity will become more viable as the Downtown park system develops, as the Children’s Museum opens and when they start realizing that Downtown San Diego already offers a significant family environment. You don’t have to drive 40 miles to Balboa Park. In relative proximity is this little jewel they call the beach, and Mission Bay, and Sea World.”

The Bosa Experience

Bosa Development remains Downtown’s largest and most active residential developer. Its Legend outside Petco Park will be ready for occupancy in September, followed by Electra at Broadway and Kettner Boulevard in January and then Bayside in mid-2009. Late next year the company will break ground at the site of the old Dave’s Display World at Kettner and Ash Street.

As the higher-end housing market Bosa serves matures in San Diego and more full-time residents move in, Bosa is upgrading to higher-end finishes such as European cabinetry and boosting amenities with better fitness centers, 24-hour concierges and larger social rooms. “At Bayside we are putting in a wine tasting room that can be booked with catering for a party up to 20,” says Dennis Serraglio, Bosa’s director of sales and marketing.

Bosa also is seeing more demand from owner-occupants — including those moving up from an earlier project — and for larger units.

“On a couple of projects that already have been designed, we are reducing the total number of units to provide larger units,” says Serraglio. Buyers, he says, “want bigger living areas and more bedrooms.” The company also is experiencing interest in combining units to create homes of 2,300 square feet to 4,100 square feet.

Serraglio says Bosa’s Bayside project is proving attractive to professionals, such as lawyers, who expect to live in the homes. The trend toward “weekday homes as opposed to weekend homes” parallels the builder’s experience in Vancouver, where it began developing condo towers in the early 1990s.

Over The Top Luxury

While mid-level executives and professionals are in the hunt for larger Downtown homes as a primary residence, they have yet to be seen in the penthouse market, reports Paul Roberts, a Realtor with Neuman and Neuman’s Fifth Avenue office of Prudential California Realty.

Rather, Roberts’ clients for such dwellings are multiple homeowners, including one he is working with to complete the $8.25 million sale of a 3,700-square-foot penthouse atop One Harbor. (Click on harborclubpenthouse.com to peek in.)

What Roberts has noticed is the expansion of the younger professionals living Downtown. “You have a lot of young execs who are living Downtown and working Downtown and not doing the Scripps Ranch kind of thing,” he says. “These 30-somethings, they moved Downtown because they want to be here. There is a life Downtown after 5 p.m. and it changes the texture and tone.”

Diverse Employer Base

After Jeremy Bruhn moved Downtown to live, he relocated his digital signage company, Allodic Marketing, to Sixth Avenue and Market Street and now hopes to expand.

Future corporate relocations are likely and desirable, yet Hall notes that Downtown residents also are poised to found and grow their own businesses. One such example is 30-year-old Jeremy Bruhn. While he didn’t start Allodic Marketing in Downtown, he relocated it to the Gaslamp Quarter in April, a month after moving into the nearby Park Terrace.

Operating from offices at Sixth Avenue and Market with three full-time and six contract employees, Allodic sells digital signage systems that use networked flat screen monitors. The signs usually contain a mix of customized information, from news and sports feeds to promotions. Changes can be made remotely and by the client. For example, a restaurant could promote its happy hour offerings by having them displayed during happy hour, or a hotel could with a few clicks easily update meeting or event activity during a trade show. “I’m in the business of selling umbrellas when it rains,” Bruhn says. His local clients include the region’s Sun Diego stores.

While Downtown’s lively visitor industry has a diverse client base within walking distance of its offices, the Centre City does not have a lock on hotels and restaurants, nor does it offer much in terms of the doctor and dentist offices and car dealerships Bruhn also is pursuing. It does, however, have the lifestyle.

“It is funny, me and my girlfriend have rediscovered San Diego,” says Bruhn, who sold his home in East County to move Downtown. “I have lived in P.B. and North County. We even considered moving the business to Colorado. But moving Downtown has given me a great feel for what the city has to offer. If we get the opportunity to expand and move into a larger office, we definitely will do that.”

Getting The Word Out

For many top-tier executives, the mindset to consider Downtown as an equal, if not superior place to locate, will not set in overnight. Similarly, the amount of employment opportunity diversity Downtown will trail the talents of its expanding residential population. “It will be a long time, 10 to 20 years or more before you will achieve a balanced live/work environment Downtown,” Valone says. “But what you needed to have happen to make that so is what you have happening right now.”

Valone also says that efforts to market the opportunities that Downtown presents can only help. “Is it the prophecy kind of element: if you talk about it, will it happen?” he asks. “Will a guy who is thinking about moving Downtown come up with that idea on his own or after hearing that it is a great idea?”