By Norma Damashek / NumbersRunner / Oct. 21, 2021
Part I: The endless summer is fading fast
Breeze through this nostalgic snapshot of the place we call home, seen through the lens of the New York Times travel page:
Like its urban rival Los Angeles, San Diego is not so much a city as a loose collection of overlapping (and sometimes colliding) communities bound by arterial, life-giving freeways: it’s a military town in Coronado; a surf town in funky, eclectic Ocean Beach; and a border town in the historic Mexican-American neighborhood of Barrio Logan.
If San Diego has a cohesive identity at all, it’s a shared embrace of an easy, breezy Southern California casualness. With its lack of pretension, the city is often seen by outsiders as a kind of Pleasantville — a bland, happy place with an exceptional amount of sunshine. Depending on how deep you look, that may be all you see. But there are, after all, worse things than Spanish tiles, palm trees, tropical blooms, year-round flip-flops, fresh fish tacos and bonfires on the beach.
Yup! they’re spot on about our spectacular climate and coastline. And they sure made their point about San Diego’s bush league political status. But they gave short shrift to San Diego’s 1st class theater… ethnic restaurants… universities… artists, musicians, and museums… engineers and doctors…
And they turned a blind eye to San Diego’s 1st class biotech and hi-tech industries, which have already replaced our venerable tourism industry as the most aggressive alpha dogs in town.
But what do business sector mavens with 20-20 vision see and say?
- Life Sciences (aka biotech) employment in San Diego jumped to nearly double the national average (13.5 % compared to 6.9 %) in a single recent decade, nourished by record amounts of venture capital funding ($9.1 billion for biotechnology startups and $21.8 billion for overall healthcare companies).
- By 2020, more than 52,000 people in the city were directly employed by Life Sciences companies, which offer average annual earnings exceeding $127,000.
- Even in the midst of the COVID pandemic, the Life Science industry contributed around $48 billion in total economic activity to the San Diego economy
In other words, it’s time to bid a fond farewell to the “easy breezy” San Diego of yore and take a closer look at the hyper-growth momentum that has catapulted our city into 3rd place among the nation’s leading innovation-hub cities (closely trailing Boston and San Francisco).
Part II: Hypergrowth requires public safeguards
At first glance, the life sciences/tech rainbow that has alighted over our town (with its bountiful pot of gold dangling at the tail end) seems like a sweet sight. But there’s more to this bonanza than meets the eye.
Our city is being propelled at breakneck speed down a pot-holed road by a band of city leaders (the Mayor… Chamber of Commerce… UCSD muckamucks… the City Council… the City Redistricting Commission). They are bending over backwards to promote and facilitate rapid economic and real estate development to accommodate this new industry.
But this kind of hypergrowth is laden with land mines if basic safeguards for public protection continue to be ignored. What does adequate public protection look like?
a) provisions that guarantee that our city’s infrastructure, sustainability, housing, water availability, and climate-related objectives can and will keep pace with accelerated urban growth; and
b) rigorous regulations to require that our new growth industry will turn a share of its immense profits (that pot of gold) back to the public to equitably distribute the costs of the city’s increased infrastructure burdens. We can call it land value recapture, or community benefits assessments, or just plain economic fairness for the people of San Diego.
Too much to ask of the life sciences/tech industry, you say? The following portrait of major players might change your mind.
Part III: San Diego’s BFF
While we all agree that San Diego has an admirable record of scientific prowess, the real economic driver of the Life Sciences boom is in the hands of our BFF–the consortium of real estate and land development interests that have long controlled our city’s history, politics, planning, and policy-making.
So when it comes down to it, the new news about San Diego’s growth and development is pretty much like the old news. The pot of gold at the end of the glittering Life Sciences rainbow will be divvied up–as usual–by San Diego’s BFF.
But there’s a distinctive twist. Today’s politically powerful top dogs are a new breed of highly evolved commercial property professionals who have cornered the market on a specialty niche item: complex real estate transactions in collaboration with “biotechnology entrepreneurship.”
Real estate analysts can’t contain their enthusiasm. Here’s what they’re telling us about the San Diego market:
- Investor attention on life science real estate is accelerating… driving pricing higher in top markets.
- REITs, institutional investors, and private developers alike are diving headfirst into life sciences. In the first half of 2021, investment volume for life sciences was $9 billion and is tracking toward a record year…
- City Office REIT has agreed to sell its entire life sciences portfolio in San Diego’s Sorrento Mesa submarket for $576M. The properties are trading unencumbered by debt to an unnamed buyer. “The deal… underscores the incredible growth in the region and Sorrento Mesa in particular….”
- In late July, Shorenstein sold a 300K SF office complex in Sorrento Mesa for $146M, a premium of roughly $150 per SF above the area’s median sale price… The resulting aggregation of life science assets and over 1M SF of zoned life science development potential created an extremely valuable portfolio.”
- Traditionally, the majority of the life science activity has been concentrated in the Torrey Pines, University Town Center and Sorrento Valley submarkets, where University of California, San Diego and Scripps have driven innovation.
- However, downtown San Diego has been a recent target for life science developers and real estate groups…Kilroy Realty, Stockdale Capital Partners and Phase 3 have all closed on life science deals in the past 24 months and are also committed to bringing life science to the downtown market.
- In September 2021, the Solana Beach-based real estate investment trust (REIT) IQHQ completed the acquisition of $1.5 billion of commercial property…for its life sciences projects. The new massive development is called the San Diego Research and Development District (RADD) and is expected to transform downtown real estate.
- IQHQ is the former brainchild of longtime life science pioneer Alan Gold (co-founder of Alexandria Real Estate Equities, then founder of BioMed Realty Trust, which sold to Blackstone Group in an $8 billion transaction… (today, Gold is executive chairman of Innovative Industrial Properties, which leases to medical marijuana companies).
- Alexandria Realty Equities (a REIT based in Pasadena, California) has a significant footprint in San Diego with an operating asset base covering nearly 5 million RSF of space. Additionally, it has 1.1 million RSF under construction and pre-construction that is expected to be delivered through 2022.
Get the picture? Although scientific progress in the Life Sciences is a noble and worthy pursuit, it is also the gold-plated vehicle for Wall Street/corporate dominance and determinant of San Diego’s future. What are the chances we will emerge as a sustainable, livable, balanced, affordable city?
Part IV: The art of the sale
In the movies or on Netflix you’ll catch a fleeting glimpse of the brand of beer the hero is drinking or the Apple logo on the computer whiz’s laptop. They are there to sell you something by means of product placement.
In political life, it’s done differently. The sellers are positioned in place but you’re not supposed to see them in action. That’s the art of the sale.
Earlier, I made the claim that a band of city leaders (the Mayor… Chamber of Commerce… muckamucks from UCSD… City Council… the City Redistricting Commission) are instrumental in promoting and facilitating Life Sciences hypergrowth in San Diego.
We’re familiar with the roles and responsibilities of the Mayor and City Council governing land use decisions that promote high density development and rapid growth. Ditto for the influence of the Chamber of Commerce on city growth.
And from the looks of it, UCSD and the City Redistricting Commission have also been inserted–but as silent bedfellows–in the high stakes process to steer hypergrowth policymaking in San Diego.
* Perched on the once-wooded mesa atop La Jolla, UCSD is our homegrown behemoth, straining and bursting to escape its present confines. The University Chancellor is known for his professional and personal interests in the proliferating fortunes of the life sciences and technology industries, as well as for his efforts to expand the University’s physical footprint in the region.
His top staff are politically savvy land-development experts. Recently, an undergraduate major in Real Estate and Development was tacked on to the Urban Studies department. In any case, the Chancellor takes no public responsibility for encouraging ongoing activities by student activists engaged in lobbying political agencies for greater urban growth and density.
* Similarly, the City Redistricting Commission is imprinted by real estate and land development interests. The Commission is made up of nine San Diegans appointed by a trio of retired judges (one of whom is Jan Goldsmith, our previous city attorney) and is charged with redrawing the political boundaries of the city’s nine Council districts.
Who is the primary client of this political endeavor? Presumably, it should serve fair voter representation within San Diego communities and the general public interest.
(Since Republicans have ceased–at least for now– being competitive in city politics, we can assume that partisan pressure takes a back seat in the present redistricting process. But in San Diego, accelerated growth and real estate development cut across party lines.)
Three of the nine commissioners have credentials as community activists. Unfortunately, one of those three was recently induced to resign from the commission over an alleged conflict of interest.
Ironically, six of the remaining commissioners actively engage in overlapping professional activities in real estate and business litigation. At least one of them has a professional relationship with the massive downtown IQHQ development. Yet another commissioner sits on the advisory board of the UCSD Real Estate & Development program (in the company of the chief investment officer of the Alexandria Real Estate corporation).
Product placement or just the luck of the draw? You decide.
Part V: The ship has sailed. How to stay afloat
San Diego is lucky. We can learn from other booming cluster cities that came before us, cities like:
1) Boston, where “The development community’s enormous acceleration of life science and lab development… as well as the ongoing tech boom… threatens to send already sky-high housing costs even higher… where, “It’s almost impossible to build our way out of the demand that we have now for housing…
2) Seattle, where “the city is now more of a playground for high-tech workers… Seattle’s housing market is still hotting up because it has high tech workers demanding housing. Sadly, no matter how you look at it, Seattle’s housing prices are skyrocketing, even in all the areas surrounding the city.
3) San Francisco, where the tech explosion years ago sent home prices skyrocketing and emptied the city of middle class workers and families.
We follow our fellow Life Sciences cluster cities at great peril. If basic safeguards for public protection are not put into place early enough, the odds are slim to none that San Diego will emerge from today’s real estate boom as a sustainable, livable, balanced, affordable city.
The NYT got it right: there are, after all, worse things than Spanish tiles, palm trees, tropical blooms, year-round flip flops, frest fish tacos and bonfires on the beach.
{ 9 comments… read them below or add one }
Really glad to see Norma returning to her keyboard.
Hear, hear! Norma, you’re an inspiration to us all.
Here is an original piece of work looking at what’s really happening all over town while San Diegans congratulate themselves on our becoming a high-tech hub like Boston, San Francisco and Seattle, where living costs are stratospheric and community is being fractured as a result.
UCSD Chancellor Pradeep Khosla is busy being a bad neighbor by building out that campus on its most populous residential western edge with dense high-rise towers and shops, destroying existing parking and easy access to the entire famed La Jolla Playhouse Theater District, creating more traffic congestion and parking scarcity.
UCSD also opened last month to 42,000+ students, many of whom were shut out of scarce dormitory living. UC can do whatever it wants and is doing just that, without collaborative gesture to community or concern for its own students.
And today we learn that a portion of the former downtown “Broadway Complex” land along the Harbor, unloaded by hotelier Doug Manchester to a “life-sciences” consortium, will be given away for free for 99 years to provide a long-promised “mostly” public park, authorized by our own Democrat-dominated City Council. Is that really a good thing, or do we just settle for whatever’s offered?
And predictable decennial redistricting cat-fights took a nasty turn last week when redistricting commissioner Mitz Lee, a Filipina, suddenly resigned over conflict of interest allegations related to a contentious proposal to excise UCSD from District One and put it in another more-Asian-populated District.
As things are rapidly changing, Norma warns to be careful what we wish for.
Ummm, I’m confused. What public protections? The 30 foot height limit was but it’s been Midway’d and is on the way out. Are there any others that are at all as effective in protecting the public from rampant greed as that has done all these years? Anything not subverted by politics? Sure doesn’t seem to work by voting for liars who do the opposite they claim!
Anyway, with all this freedom and liberty bestowed on us people don’t need no stinking protections! All they need is faith in ‘market-base solutions’ to remedy all the ills of San Diego into one very nice controllable package. Of course this entire scenario has been created and is controlled by the wealthy who profit from it. But they’re only looking out for your best interests! Trust them, they’re rich!
Follow where the profits are going and you’ll find the people that don’t want to answer questions. The higher up the food chain of power the less they want to hear from you. Lying as an art form with politicians?
Not to be cynical or anything but where are all the underpaid dead-end job lower working class labor…you know, those so-called ‘essential’ workers during this Pandemic that keep the city working for those who can afford to stay home and not chance getting sick, going to live? The website PublicCitizen (citizen.org) has a recent state by state graph showing the cost of renting a 2 bdrm and what a person needs to be earning, and California is number 1 at $39 an hour. Hawai’i is second at $38. Screw that useless $15 number as a two-parent family working full time is still $8 an hour short! Not including child care…
Wages should have kept up with what the wealthy are taking in don’t you think? What do those temp agency janitor jobs, waitress jobs, store stocking jobs, bartender jobs etc etc pay? Enough to afford three hour commutes in bumper to bumper traffic? Because it’s pretty obvious that the infrastructure to move large numbers of people quickly and efficiently from the outskirts where they can afford to live to where their low-wage jobs are certainly isn’t there.
So as the workers get pushed farther out to the fringes just who’s going to do the ‘essential’ work? Certainly don’t have a decent (in a Japan sense of the word) public transportation system in San Diego and low wages don’t pay the cost of vehicle upkeep, gas, and insurance to get to and from a lousy long-distance job that won’t pay your bills anyway…
And then there’s the question of where all the water is going to come from, eh? All these new buildings are going to need a LOT more water I’m guessing. But again, don’t worry your fuzzy little head because the movers and shakers of San Diego have all of this under control. They truly do know what’s best for you and your family! They must have a PLAN, right?
Feeling a wee bit cynical today.
sealintheSelkirks
Seal, the way you use “cynical” makes me think of what George Carlin said about being paranoid: it ain’t paranoia if every one is out to get you.
HA! Paul, that’s a compliment. San Diego politics hasn’t changed a freaking bit. In some ways it is almost comical but then again it’s not funny at all. Worse, it isn’t just SD. Corrupt Neo-liberal economics infests everything.
Below link explains well how San Diego politics operate if you haven’t read it. Or anybody else who hasn’t read it, should. Remember facts over myths can be disturbing! But it doesn’t mean people should stop trying to stonewall as best as they can the ethically deficient greedy from imposing their will on us. Imagine what George Carlin would have done with this if only he had lived just a few years longer to when it published. Could have been a sequel, You Are All Diseased Part II.
https://www.cambridge.org/core/journals/perspectives-on-politics/article/testing-theories-of-american-politics-elites-interest-groups-and-average-citizens/62327F513959D0A304D4893B382B992B
Ouch.
sealintheSelkirks
Tech and life science companies moving into Downtown will be the death knell for Barrio Logan. Gentrification is already an issue with run down homes selling for over $600k, pushing out long time renting residents. It will get exponentially worse forever changing the character of one of San Diego’s few communities that actually has character.
Yup, you’re right, as usual. (Happy Bday, BTW)
As usual, Norma is spot on!