{"id":218177,"date":"2025-09-11T12:46:11","date_gmt":"2025-09-11T12:46:11","guid":{"rendered":"https:\/\/www.europesays.com\/us\/218177\/"},"modified":"2025-09-11T12:46:11","modified_gmt":"2025-09-11T12:46:11","slug":"is-buying-the-california-theatre-too-risky-for-a-developer-san-diego-union-tribune","status":"publish","type":"post","link":"https:\/\/www.europesays.com\/us\/218177\/","title":{"rendered":"Is buying the California Theatre too risky for a developer? \u2013 San Diego Union-Tribune"},"content":{"rendered":"

California Theatre is for sale again<\/a> after decades of attempts to demolish or remake the property.<\/p>\n

There is no listed price for the site, perhaps signaling that the nearly 100-year-old building is a tough sell. Yet one thing should make the sale easier: It is no longer bound by a preservation agreement that would see parts of the property saved for historical purposes.<\/p>\n

The site itself has a few potential things going for it (for an optimistic developer): It\u2019s right on the San Diego Trolley line and next to many government offices in San Diego\u2019s Civic Center. However, the C Street corridor is economically depressed and a major center of people experiencing homelessness.<\/p>\n

A previous owner had planned a massive condo tower<\/a> on the property. Other ideas kicked around over the years have been subsidized housing<\/a> or even returning it to its history of entertainment<\/a>, as a high-end theater and performing arts academy.<\/p>\n

Question:<\/strong> Is buying the California Theatre too risky for a developer?<\/strong><\/p>\n

Economists<\/p>\n

Ray Major, economist<\/strong><\/p>\n

YES:<\/strong> The theater is located in a blighted part of downtown and far from any concentration of development one would want to be close to. Downtown is over built with commercial space, the site is wrong for residential, so the highest and best use and most profitable might possibly be a multi-level parking structure with shuttle service to Petco Park that could undercut the $10-an-hour rate the city has imposed on its residents.<\/p>\n

Kelly Cunningham, San Diego Institute for Economic Research<\/strong><\/p>\n

NO: <\/strong>\u201cLocation\u201d is the most important consideration in real estate, so the building has some intrinsic value. Prominently located on prime real estate directly across the street from City Hall, conditions imposed to preserve and use the building limited feasibility for the property\u2019s value. If those restrictions are removed, the financial viability of the property is significantly enhanced. Timing is another significant consideration in real estate, with the property\u2019s actual structure being a somewhat subordinate factor.<\/p>\n

Alan Gin, University of San Diego<\/strong><\/p>\n

YES:<\/strong> The site has some potential. There is weakness in the downtown office market, but residential demand is solid. That would probably be the best use of the property if the homelessness issue can be resolved. The elimination of the requirement for some historic preservation would make that easier. But there is too much uncertainty in the overall economy right now with the impact of tariffs, the slowing job market, both nationally and in San Diego, and the uncertainty about interest rate policy.<\/p>\n

James Hamilton, UC San Diego<\/strong><\/p>\n

NO: <\/strong>Provided the city and state are prepared to stand 100% behind any plans the new owner has for renovation. By this I don\u2019t mean throwing in taxpayer funding. I mean allowing the building to be torn down if need be without imposing a long wish list of do\u2019s and don\u2019ts. Regular people shake their heads in disbelief at the dysfunctional system that allowed this situation to go on for as long as it has.<\/p>\n

Norm Miller, University of San Diego<\/strong><\/p>\n

YES: <\/strong>High interest rates, uncertain construction costs, a time-consuming approval process, the carrying cost of an empty building, the lack of office or retail market needs in this location, constrained condo demand, homeless encampments nearby all suggest that this site might have a negative value, even if demolition is possible for any developer seeking a reasonable return to risk ratio. If the site were cleared, at least it would have some value as a parking lot.<\/p>\n

Executives<\/p>\n

Chris Van Gorder, Scripps Health<\/strong><\/p>\n

YES:<\/strong> Yes, if the plan is to demolish. Despite the preservation agreement being removed, the political environment and community sentiment is clear. If that tide changes, then it\u2019s simply an issue of cost of demolition and cost of new building plus the market \u2014 will a downtown building with more condos sell right now and what is the homeless situation which always impacts decisions to purchase.<\/p>\n

Jamie Moraga, Franklin Revere<\/strong><\/p>\n

YES: <\/strong>As much as I\u2019d love to see the California Theatre restored to its former glory, taking on development where demand is lacking and in a city that emphasizes regulation over a pro-business approach is a significant risk. The property also sits in a blighted area of downtown needing revitalization. Unfortunately, market realities, downtown\u2019s challenges, and the difficult business environment at the city, county and state levels make this project unattractive for most developers to pursue.<\/p>\n

Phil Blair, Manpower<\/strong><\/p>\n

YES:<\/strong> Riskier than any of the other six to eight blocks downtown being offered up for development by the City\/Downtown Partnership. It is going to be a tough sell since the C Street Corridor is one of the most rundown areas of downtown. It is also an island with no retail, restaurants or shops to give the area a neighborhood feeling, like Little Italy. Add the challenges of office building development due to the current glut of office space and yes, it is too risky.<\/p>\n

Gary London, London Moeder Advisors<\/strong><\/p>\n

YES:<\/strong> The California Theatre anchors a downtown \u201cblack hole,\u201d a neglected and hostile place adjacent to a dilapidated City Hall and a failed C Street. Once demolition is initiated by the end of this year, it may be more marketable. But there is no immediate demand for anything in this part of downtown until the greater area is cleaned up. The Downtown Partnership is working on that. But the mayor and council need to step up.<\/p>\n

Bob Rauch, R.A. Rauch & Associates<\/strong><\/p>\n

YES:<\/strong> The building has been shuttered since 1990 due to safety concerns. It has heavily deteriorated, with boarded windows, graffiti and potential asbestos issues, and the current owners are subject to a mandatory settlement agreement. On the other hand, it sits in the heart of downtown San Diego with high visibility and potential for mixed-use redevelopment. Still, a developer would require deep pockets, a strong legal team, and a bold vision \u2014 too many better opportunities.<\/p>\n

Austin Neudecker, Weave Growth<\/strong><\/p>\n

YES:<\/strong> For most developers, this site is mired in substantial complications that stretch from environmental and structural costs to a challenging immediate neighborhood with safety concerns and in desperate need of redevelopment. The 2026 sell or demolish deadline is a forcing function for a discounted, expedient sale, and trolley access with a central location would argue for a large housing complex. But without additional incentives and expedited permits, raising capital and successful pre-leasing will be tough.<\/p>\n

Not participating this week:\u00a0<\/strong><\/p>\n

David Ely, San Diego State UniversityCaroline Freund, UC San Diego School of Global Policy and Strategy<\/p>\n

Have an idea for an Econometer question? Email me at phillip.molnar@sduniontribune.com<\/a>. Follow me on Threads: @phillip020<\/a><\/p>\n

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