Horton Plaza developer wants to turn former Macy’s store, empty lot into 40-story apartment towers.

Property owner Stockdale Capital Partners said it is planning to build 850 residential units at the former retail center now known as the Campus at Horton.

BY JENNIFER VAN GROVE – JAN. 5, 2024

The developer remaking Horton Plaza mall into a mixed-use office campus has unveiled plans to erect two, 420-foot-tall residential skyscrapers on the 10-acre property between First and Fourth avenues in the heart of downtown San Diego.

Last month, real estate investment firm Stockdale Capital Partners announced that it expects to break ground on a 40-story tower with 518 apartments and ground-floor retail at the site of the former Macy’s store in the second quarter of 2025. Completion is anticipated in late 2027.

The developer said it is also looking to build a second, 40-story tower with 332 apartments on a surface parking lot along G Street, although its timing depends on market dynamics.

The residential endeavor comes as the developer prepares to open its long-awaited Campus at Horton in October.

“We had always anticipated doing some towers as we moved through the first phase of Horton, which is now being completed with some tenancy,” said Dan Michaels, who is Stockdale’s managing director. “The idea is, OK, this project will be wrapped up in terms of construction. It’s finally starting to take form and tenants will start building out space in 2024. So now we’re in the planning phase with the ability to put shovels in the ground in 2025 and deliver 800-plus units across the Macy’s site and the site in the back of the property.”

Dan Michaels declined to share the anticipated cost of the phase-two additions but said that Stockdale has lined up financing for the residential towers.

The Campus at Horton is the reincarnation of Horton Plaza, an iconic San Diego landmark and post- modern mall credited with helping revitalize downtown in the mid-1980s. The seven-block property includes the 37,000-square-foot, city-owned Horton Plaza Park at 900 Fourth Ave.

Stockdale purchased the retail center for $175 million in August 2018. The following year, the Los Angeles-based developer received approval from the city of San Diego to convert the mall into a mixed-use campus with 772,000 square feet of office space and 300,000 square feet of retail. In March 2020, the firm secured a $330 million construction loan from investment services firm AllianceBernstein, pegging the developer’s phase-one project cost at $505 million.

The developer originally viewed the property’s substantial office square footage as ideal for technology outfits, but later focused its strategy on attracting  life science companies. For instance, the crown jewel of the campus is the former Nordstrom department store on G Street, which has been converted into a lab-friendly office building with five new floors and windows everywhere.

No office or life science tenants have been announced to date.

In August, Stockdale announced the property’s initial slate of retail tenants, which include elevated burger chain Shake Shack, upscale beauty services company Salon Republic, fast-casual restaurant Sweetgreen, and specialty fitness concepts Studio Three Fitness and Rumble Boxing.

Although the former mall — which has served as a construction site since 2019 — is getting ready for its campus debut, the Macy’s box has remained structurally intact and mostly untouched. Its existence is masked within the central spine of the project by the surrounding the environment. The developer is still figuring out whether it will retain or demolish the existing structure.

As currently planned, the tower at the Macy’s site is anticipated to include 12,600 square feet of ground-floor shops along Broadway Circle and seven floors of parking with 616 spaces. The remaining upper floors will be reserved for residential units. The building will also include a rooftop pool, gym, clubhouse, dog park and a pedestrian walkway to the office campus, the developer said.

The second, 40-story residential building along G Street, which is being designed in parallel, is slotted for the small surface lot between Second and Third avenues, and will be built over the adjacent parking garage.

“(The timing of the second tower) depends a little bit on what happens in terms of the market and financing. Most likely, we’ll launch the Macy’s tower first,” Michaels said. “We’re planning both now and studying both now and considering options in terms of programming and partners.”

The exact mix of residential units and their affordability levels have yet to be determined, he said. The proposed development is, however, subject to the city’s affordable housing regulations, which currently require 10 percent of units be rented to very low or low-income families, or households earning between 30 percent and 60 percent of the area median income.

Stockdale has yet to submit a development application to the city’s Development Services Department, meaning the required permits are unknown, a spokesperson for the department said.

The envisioned towers add density in a way that has been contemplated since the city amended its land-use contract with the developer, or what’s known as the Owner Participation Agreement. And Michaels said the residential buildings will only require ministerial — as in, by-right — permits. An application will be submitted in the first half of this year, he said.

In the interim, the Campus at Horton office complex will likely be considered by a city real estate consultant as a potential replacement facility for San Diego’s aging City Hall. The city is finalizing a consultant agreement with Canadian firm P3 Advisors to evaluate options. The firm is first tasked with determining by early February whether San Diego is better served building its own skyscraper to house the city’s downtown workforce or acquiring an existing property, said Jay Goldstone, who is a special adviser to Mayor Todd Gloria.