Westfield UTC mall starts construction on apartment building on siteSeptember 7, 2017
By Phillip Molnar | The San Diego Union-Tribune
Mall operator Westfield broke ground this week on a $200 million residential development in University City to be completed by 2019.
The 23-story building, with 300 apartments, is a first in the United States for the retail giant but part of a larger residential expansion that will monetize valuable land in major cities as retail struggles.
Located at the corner of Nobel Drive and Lombard Place in a former Westfield UTC mall parking lot, the apartment building will include studios, one-bedrooms, two-bedrooms and three bedrooms. Westfield has yet to release a rent estimate, but it will likely command a high rate given the area and amenities.
Burt Flickinger, managing director of retail consulting firm Strategic Resource Group, said slumping retail sales — because of a reduction in foreign visitors, online sales and gas prices — make mixed-use changes to Westfield properties a smart financial move.
“There’s a better return on invested capital from residential than retail,” he said. “There’s still good retail, but customer counts are down.”
Flickinger said having a bunch of people living at the mall can be positive for business, but will only be a drop in the bucket. He said a good mall needs at least 35,000 people a day visiting on the weekend, although counts vary based on many factors.
Australian-based Westfield is pushing ahead with other residential projects on its properties across the globe. Next up is a 1,200-apartment complex at Stratford City in England. The San Diego project is being developed with Greystar, based in Charleston, S.C., which will manage the complex when it opens.
The San Diego project is seemingly sparing no expense. Residents will have access to a pool, spa, outdoor kitchens, grills, fire pits, gym with yoga and spin classes, steam rooms, library and private work stations, underground parking, as well as 24-hour concierge services.
There will also be a “sky lounge” on the 23rd floor with ocean views, private dining and bar. A clubroom on the third floor will include a sports lounge and billiards.
“Being able to offer the chance to live in close proximity to great shopping, dining,entertainment, health and fitness, and workspaces, is very exciting,” wrote John Alderson, Westfield’s vice president of development in San Diego, in a news release.
Average asking rent in the University City area is $2,323 a month, said real estate tracker CoStar.
The newest property in the submarket is the 360 Luxury Apartments on Sydney Court, which charges an average asking rent of $2,651 a month for its 309 units. The complex opened in 2016 and was built by New Jersey-based Garden Communities.
A boon for Westfield residents and the mall, an extension for the San Diego trolley’s blue line connecting to UTC is anticipated to be completed by 2021. Westfield UTC mall is now in the middle of a $600 million expansion expected to be completed this year.