San Diego’s burgeoning new tech hub poised to reshape downtown

On a quintessential San Diego day—and, this being the land of sun, sandals, and surf, there are many—one could do a lot worse than soak up the sunshine in the Quartyard. An array of shipping containers set up in a formerly abandoned lot in the East Village, a rapidly rebounding warehouse district near downtown, this 23,000-square-foot community space buzzes with activity. Locals hit up the adjacent coffee shop and dog park in the morning, freelancers tap away on laptops in the afternoon (free outdoor wifi), revelers perch on the long communal tables during happy hour. EDM icon Skrillex played a show here last year.

According to Philip Auchettl of RadLab, the local architecture firm that designed the space, their placemaking proposal tapped into the evolving identity of the area, a growing urban hub in the shadows of some of the city’s busiest areas, such as the gentrified Gaslamp Quarter.

"It’s not clubby, it’s more like a community," says Auchettl. "We saw a blighted lot and thought, this is city-owned property that’s underutilized. The whole concept was about activation. I’m looking outside right now, and see about 100 people hanging out in the beer garden."

This busy, bustling, community center, which opened last year, is also on its way out. Auchettl and his collaborators have been a beta test, of sorts, for a different type of placemaking. A massive set of planned developments in this section of San Diego seeks to transform the surrounding blocks, including the Quartyard, into a new tech hub that proponents estimate will bring 13,000 design and tech jobs to the neighborhood over the next 12 years. Developers and planners want to take the next step in activation, turning the hip neighborhood into a live-work district for techies and designers. They may need a few more tables and benches for happy hour.

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I.D.E.A. District, a larger vision for the neighborhood, as well as Makers Quarter, a in-the-works urban district that will add 2.5 million square feet of office, commercial, and residential developments across six city blocks, anchor the transformation in the upper East Village. One of the first new buildings, the six-story IDEA1, set to open in August of 2017, will contain 295 apartments, commercial space, and 25 live-work lofts on the ground floor ringing an outdoor collaborative workspace known as the Hub, inspired in part by the Quartyard.

The 95-acre I.D.E.A. District (the name stands for innovation, design, education, and arts) will be the latest instant urban neighborhood, part of the race between cities to attract entrepreneurs, millennials, and the innovation economy. As the Quartyard-to-Hub transition show, it’s as much about lifestyle amenities as creating a core of complimentary businesses. For San Diego, it’s also a chance to shed its laid-back reputation and showcase its under-the-radar tech scene.

"The question is, how do we represent the soul of San Diego?" says Stacey Pennington of SLP Urban Planning, the group that drew up the masterplan for Makers Quarter along with the developers L2HP. "We’re known for beaches and surfing, but we’re so much more. We’re showing that you don’t have to choose tech or lifestyle. The answer should be both. You can solve these big problems while living your best life."

These new developments have the potential to add thousands of jobs, according to David Graham, San Diego’s Deputy Chief Operating Officer, and help create a new tech center in the midst of downtown.

"I think we’re sitting at the precipice of a moment where San Diego gets recognized for its long history of invention, innovation, and reinvention," he says.

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San Diego has always had a strong footing in the science and technology fields, from the military contracts and collaborations that come from the heavy Navy presence, to the presence of research centers such as the Salk Institute and Qualcomm, a semiconductor and wireless multinational and a huge player in mobile tech. Life science, cybersecurity, and defense have always been big industries, but the more bottoms-up, startup world hasn’t always been a fixture. While LA is media-driven and San Francisco is about software, San Diego has traditionally focused on what Graham calls the "hard problems," such as chemistry, biology, genomics, and medical devices.

That’s changed in recent years. San Diego’s software development output is sizable —the software ecosystem in the region adds $12.2 billion to the economy, according to the San Diego Region Economic Development Council, and earns it seventh place in the software power index, ahead of Austin, Portland, Los Angeles and New York —and the city is ranked second in the percentage growth of degree-holding millennials.

"There’s no Facebook office, no big Google presence, no Microsoft," says Graham. "There isn’t a big brand name, but there’s a lot going on. You have researchers who can hit the surf in the morning before putting on a lab coat."

What many in the industry believe San Diego lacks is the right kind of live/work district downtown. Waves of development over the last few decades have helped revitalize a city core once known as a rough area dotted with peep shows and nudie bars tcatering to soldiers and sailors on leave. From the Horton Plaza shopping center to Petco Park baseball stadium to a recent wave of high-rise towers neat the ocean, residential and commercial have come back strong.

But while there is startup activity in the traditional downtown, many of the jobs are in the suburbs, creating a big reverse commute. A report last year by the Downtown San Diego Partnership found that 36,000 residents call downtown home, making $71,000 median salary, but 70 percent are commuting out of the city every day. The city seemed to have the ‘live’ and ‘play’ parts down, just no ‘work’—a vertical bedroom community.

Six years ago, David Malmuth, a local real estate developer who used to work for Disney, and his partner Peter Garcia, saw an opportunity in the East Village, a cluster of old warehouses positioned between downtown and the highway, just north of Petco. With its hodgepodge of historic building and surface parking lots, the hip neighborhood it offered an opportunity for large-scale development without extensive business relocation. Instead of developing piecemeal projects, he decided to create a unified plan for the community.

"If we didn’t intentionally build a downtown job cluster, it wasn’t going to happen organically," he says. "That young cohort of talented people would just go elsewhere, places with a better vibe, better jobs, better amenities. If we can’t capture them at 25, they won’t come. There’s a lot of energy around innovation here, and that’s not what San Diego has traditionally been selling."

Malmuth’s original concept was more of a marketing idea—they called it a vision because they didn’t actually own any land, so plan seemed presumptuous—but after creating guidelines for development and getting area property owners on board, it now has plenty of momentum. Without any government funds, Malmuth’s concept has now birthed a building boom, with multiple buildings construction or breaking ground in the next few years.

"We didn’t want to stifle anybody’s creativity," he says. "If you look at any great city, it’s heterogenous. It should be the antithesis of a master plan."

These new development have the potential to greatly reshape the potential and personality of the city. The Makers Quarter project Pennington is working on includes residential towers already in the works, set to open in the next few years.

"We want to build upon the strength of the neighborhood and engage the community from the inside out, and help shape what the neighborhood will become," she says.

The neighborhood, lined with restaurants and brewpubs such as Monkey Paw, has already drawn in the tech crowd, and companies have converted older buildings into new offices. Amid warehouses and factories that used to hold companies such as Jerome’s Furniture, tech companies are moving in. The Coliseum, a former boxing gym, will become Punch Bowl Social, a food, beverage and entertainment concept, and Block C, which surrounds The Coliseum, will become a startup incubator.

Sumner Lee runs Fuse Integration, a software firm that works with first responders and the Department of Defense (an air force veteran, he’s one of the many examples of the military and tech worlds overlapping). His firm moved into an old warehouse in Makers Quarter a year and a half ago. The once "beat-up" neighborhood has been transitioning for years, and he felt it was the right time for a move. His company hasn’t been disappointed.

"It’s this awesome and innovative environment," he says. "They’re really focused on building innovation and small, nimble businesses like ours. It’s a great place to be."

The I.D.E.A. District makes the same bet that most developers and planners have been making: attract young talent, preferably in tech, and get them to set down roots, and benefit from a multiplier affect.

But, does that mean this is just another in a series of copycat projects, aiming to hook the same, relatively small pool of talent? Graham feels the bottom-up, community-based approach on display in the East Village is much more organic and focused than other efforts.

"Authenticity matters, and people in tech can smell a fake in a second," he says. "I’m not going to take people to a blighted block and tell them, ‘alright, here’s your new innovation district.’ It doesn’t make sense."

In addition to the expanding Makers Quarter developments, a new urban park, the East Village Green, will open in 2017, adding a performance space and playground. UC-San Diego, which will eventually be connected to the neighborhood by a forthcoming trolley line, is exploring new options for establishing a downtown presence. By growing up, and not out, this expansion of downtown is poised to make the city more dense, and help engineer an entrepreneurial boom.

"It’s never been about emulating San Francisco," says Malmuth. "I see stories about San Diego wanting to be the next Silicon Valley, and I blanche. We just want to be a better version of what’s already here."