San Diego picks team for arena project in Midway District
Mayor says the goal is a completely new arena to anchor a planned entertainment district.
San Diego’s efforts to create a massive entertainment district on the city’s 48-acre sports arena site in the Midway District will be led by a development team with experience creating similar places in cities such as Los Angeles, London and Berlin.
Mayor Kevin Faulconer announced his selection of the team, led by Brookfield Properties and ASM Global, on Aug. 29, saying the city’s goal is to have the entertainment district include a completely new arena that would replace the 54-year-old Pechanga Arena.
“The vision for this property is for a world-class arena, park space and amenities,” the mayor said. “A new arena has always been a priority of mine, and it’s the right time.”
The district also would include thousands of housing units in high-rise buildings to help pay for the amenities. The developer initially proposed building 2,100 units, but city officials said that number may need to increase to help pay for a new arena.
Brookfield Properties specializes in mixed-use districts, and ASM Global runs Pechanga Arena, L.A. Live, The O2 in London and Mercedes-Benz Arena in Berlin.
Faulconer said ASM Global’s many years running San Diego’s arena gives the team crucial local knowledge that was appealing to the selection panel. Despite its age, the arena was hosting about 150 events per year before the COVID-19 pandemic.
Rival developers are proposing contrasting visions for the future of San Diego’s 48-acre sports arena property in an area that city officials hope to transform into a thriving entertainment district with dense housing projects.
The team was chosen over one led by Toll Bros. Housing. That team proposed more public amenities than Brookfield, including an amphitheater, a soccer stadium and a large public park.
The city gathered public feedback on both proposals for 10 days in July. The results of that feedback haven’t been released, but Faulconer said it was clear the public wants park space on the site and a completely new arena.
The Brookfield team ultimately won out because of its experience with entertainment districts and its financial wherewithal, said Erik Caldwell, one of Faulconer’s top aides.
“A key factor was their ability to finance and execute a project of this size,” said Caldwell, a deputy chief operating officer who led the city’s selection panel.
ASM Global operates 325 venues around the world, including 115 arenas. Many of those venues were built by public-private partnerships similar to the deal San Diego will begin negotiating with Brookfield and ASM Global.
Faulconer said negotiations will begin soon and continue into early next year. He projected that a formal deal will be presented to the City Council for approval during the first quarter of 2021.
A key factor in the process will be a November ballot measure that could lift the city’s 30-foot coastal height limit in a targeted area surrounding the arena.
If the proposition, which will appear on the ballot as Measure E, gets support from a simple majority of city voters, it will allow more-intense development on the site and give the city and Brookfield more flexibility.
The negotiations will span two mayoral administrations, because Faulconer is termed out and will be replaced in December by either Barbara Bry or Todd Gloria.
While a shift in leadership could be a challenge for the negotiations, Caldwell said he doesn’t expect any hiccups.
“Negotiations will be centered on their response to our request for proposals, and legally they can’t really drift away from that,” he said. “It’s really just going to be fine-tuning.”
Though Brookfield’s initial proposal included a scenario in which the sports arena would be completely rebuilt, the proposal didn’t specify square footage, cost or method of paying for a new arena.
The rival development team led by Toll Bros. estimated that a new arena would cost $300 million to $600 million, with the higher number necessary if the city wants an arena large enough to attract a franchise from the National Basketball Association or the National Hockey League.
One of two developers proposing massive entertainment districts on San Diego’s 48-acre sports arena site has added the possibility of a new arena.
Brookfield’s initial proposal included five acres of public parks, 2,100 housing units and 590,000 square feet of retail space — a total of 2.3 million square feet of development. The proposal didn’t include office buildings, a hotel or additional entertainment venues beyond the sports arena.
Brookfield officials estimate that development could generate 3,200 jobs and an annual economic impact of more $300 million.
Leaders of the development team said they’re grateful to Faulconer and the city for the opportunity.
“Brookfield Properties and ASM Global appreciate the city’s confidence in our team and vision for the iconic sports arena site,” said Zach Adams, a Brookfield vice president of development. “We are excited about leading a collaborative conversation with the community, and we plan to form a community advisory panel to help shape the project and provide ongoing input to our team.”
Chuck Steedman, executive vice president of strategy and business development for ASM Global, said the team is focused on including a new arena in its plan.
“The future of the sports arena site is bright, as we are committed to creating a world-class destination by delivering an exceptional mixed-use development and working toward a collective goal of building a new sports arena,” he said.
Caldwell said another strength of Brookfield’s proposal was that it allowed for a scenario in which voters reject Measure E, requiring a less ambitious redevelopment of the sports arena site.
The Brookfield team said it plans to help support the campaign promoting Measure E but declined to specify how large a financial contribution it might make toward the effort.
City officials have long touted the 48-acre arena site as an ideal location for a thriving entertainment district with dense housing projects. It is located near Mission Bay, the airport, Old Town and San Diego’s beach communities.
The City Council approved a new development blueprint for the Midway District in 2018 that envisions a significant increase in housing units and breaking up the area’s “megablocks” to create a more cohesive community.
Faulconer said the public should be confident the city will handle the negotiating process well because it is following a new model created in the wake of the city’s notorious purchase of a large downtown office building on Ash Street.
The Ash Street building has required millions more in renovations than anticipated by city officials, who have been criticized for not consulting with real estate experts before buying the building.
For the arena project, the city hired real estate investment experts Jones, Lang and Lasalle to help with the negotiations. The firm has helped San Diego negotiate its recent deal with SDSU West for the city’s Mission Valley stadium property.