Navy studies proposals for 70-acre NAVWAR property in Midway District
The federal government received detailed proposals from short-listed development teams competing for a 99-year ground lease for the expansive site.
The Navy has moved into the final leg of a real estate competition to replace its obsolete NAVWAR facilities and remake the rest of the 70.3-acre military campus that bumps up against Interstate 5 in San Diego’s Midway District.
The federal government said this month that it received proposals from short-listed development teams but did not disclose how many proposals it received, identify the participating developers or provide a description of the bids.
Detailed bids for the expansive property were to include site and design drawings for new government facilities, a demonstration of proposed private development concepts, financial models and a proposed schedule.
The competition is expected to culminate with the Navy selecting a winning proposal before the end of the year. The parties then would enter an exclusive negotiation period.
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“I’m pleased to see progress on this important project,” Rear Adm. Doug Small, who heads the Naval Information Warfare Systems Command, said in a statement. “As we march forward toward the goal of new mission-capable facilities for NAVWAR, we look forward to continuing our close partnership with the city and local community.”
The Old Town Campus at Naval Base Point Loma, owned by the Navy since the mid-1990s, is home to the military’s Naval Information Warfare Systems Command and Naval Information Warfare Center Pacific divisions. The property, commonly referred to as NAVWAR, consists of two large parcels straddling Pacific Highway with 1.68 million square feet of administrative, lab and warehouse space spread across World War II-era hangars that are said to be past their useful life.
In November, the Navy formally put the property on the market, asking development teams to respond with their resumés and high-level visions for the site. In April, the Navy said it had invited four development teams to respond with more detailed submissions.
The Navy is offering the land for “in-kind” consideration, meaning it wants to exchange the property, in lieu of cash, for new facilities. The government’s preference is to transfer the property through a 99-year ground lease, subject to approval by the secretary of the Navy.
“This is probably the largest public-private real estate [deal] the Navy has ever done.”
— Mark Balmert, president and CEO of San Diego Military Advisory Council
The format is modeled after the Navy’s 2006 agreement with Manchester Financial Group for the 12-acre Navy Broadway Complex opposite San Diego Bay. The experimental public-private partnership eventually resulted in a 17-story waterfront office building for Navy Region Southwest, Naval Facilities Engineering Command Southwest and Navy Region Southwest Reserve Component Command. Manchester later sold the remainder of the site to developer IQHQ, which is building a large life science complex and public park.
Teams participating in the NAVWAR competition likely are proposing mixed-use projects with new Navy facilities and a substantial number of residential units alongside hotels, office buildings and retail shops. A preliminary environmental analysis conducted by the Navy studied a development concept with 19.6 million square feet of development — including 10,000 residential units — all spread across 109 buildings as tall as 350 feet. The development intensity is possible because the Navy’s land is not subject to local zoning laws or building height restrictions.
The Navy repeatedly has stated a desire to be a good neighbor, though it has taken a closed-door approach to its solicitation process in an effort to maintain the confidentiality of negotiations. Participating teams, bound by a non-disclosure agreement, have been barred from talking to the media or openly discussing their plans for the site with community groups.
“The Navy has a very large budget. They do a lot of real estate transactions, but most of the things the Navy does is already on government property,” said Mark Balmert, president and chief executive of the nonprofit San Diego Military Advisory Council. “As big as the Broadway complex was in that public-private venture, this is several times larger. This is probably the largest public-private real estate [deal] the Navy has ever done. Maybe that’s what makes them extra cautious.”
The Navy said it also will continue to evaluate the feasibility of a NAVWAR-only development funded by traditional military construction methods. It referenced the aforementioned environmental work, which was paused after backlash to conceptual models that depicted a wall of skyscrapers towering over I-5.
The Navy is required by the National Environmental Policy Act to prepare an environmental impact statement evaluating multiple development alternatives, and work on the document is expected to resume once the real estate competition concludes.