Developers are turning their attention to North Park in hopes of drawing renters who want an urban lifestyle with a funky touch but eschew the more hectic downtown lifestyle.
The neighborhood, which takes its name from its location just north of Balboa Park, is going through a gentrification that started several years ago but has accelerated with high-end apartments replacing older, more modest accommodations.
“There’s a big renaissance going on in North Park,” said Allen Chitayat, a first vice president of CBRE.
“It’s a very well located market. You can actually bike downtown. You don’t need to get on a freeway,” Chitayat said.
For those who drive to work, big employment centers such as Mission Valley are a commute of 30 minutes or less.
“Then you have all the nightlife and the eateries that have come in and you’re within walking distance,” Chitayat said. “Just call it the perfect storm that seems to fit North Park in terms of this gentrification.”
A revised community plan also encourages denser development along El Cajon Boulevard, and a large swath of North Park has been designated as an opportunity zone with federal tax breaks available to developers who build there.
“We’ve seen a lot of interest in upgrading properties and building new,” said Ray Adams, a managing director of Cushman & Wakefield’s San Diego offices.
“The neighborhood’s been hot for over eight years and it continues to get better. The millennials and younger love the neighborhood,” Adams said. “Young people in their early 20s love it there.”
Among the more prominent new developments are The BLVD apartment project which HG Fenton is building at 2020 El Cajon Blvd. and the recently completed Broadstone North Park built by Alliance Residential at 4223 Texas St.
“We thought it was an exciting site for the future of North Park’s growth and El Cajon Boulevard’s revitalization,” said John LaRaia, H.G. Fenton vice president of government and community strategy. “The new restaurants, new breweries, and the excitement that’s around this neighborhood in general is something we’re proud to be part of.”
The BLVD’s target renter is someone who is looking for place that’s close to work and transit, that has ample entertainment venues and retail shops but is away from downtown, LaRaia said.
Other new projects include The Jackson, a 34-apartment project by Flynn & Bothwell Builders at 4126-4144 30th St., and the 23-unit Indiana Street Apartments by Wright Real Estate Management at 3525-3535 Indiana St.
“We definitely anticipate several other projects coming out of the ground,” Adams said.
Broadstone and The BLVD stand out partly because of their size.
The BLVD will have 165 apartments and Broadstone has 118.
Most of the other projects in North Park are smaller because the neighborhood is made up mostly of small parcels of land.
Finding the Parcels
“That’s been a challenge for developers, to find these contiguous parcels rather than do one smaller parcel,” Chitayat said. “Typically, you’re going to see anywhere from six to maybe 20 units or 30 units.
Adams said it’s unlikely that there will be many other projects as big as The BLVD and Broadstone in North Park.
“There are just a lot of small lots that are being redeveloped,” Adams said. “You can only fit so much on a small lot.”
Darcy Miramontes, an executive vice president of JLL, said North Park is “a fantastic infill market” that’s ripe for new development.
Getting the Amenities
“A lot of the buildings were built many years ago and even if renovated, don’t have the amenity set that the resident of today is looking for,” Miramontes said. “What the new development will offer is more amenities that renters are looking for today. That’s anything from parking to a dog station or a clubhouse room that has high-speed Wi-Fi — a lot of different things that aren’t offered in these older projects.”
Unlike the nearby Bankers Hill neighborhood, where several new condominium projects have come online in the past few years, most of the development and redevelopment in North Park has been apartments.
“The difference in value between apartments and condominiums is minimal and apartment development is a safe development. There’s minimal risk in leasing up apartments verses selling condos,” Adams said. “It’s easier to rent it up than to sell them.”
Bankers Hill, on the other hand, has been attracting condominium developers because the land is more expensive than in North Park.
Rents also have risen to the point in North Park where developers feel they can make a profit in building apartment projects.
In some of the newer projects, monthly rents are averaging $2,400 to $2,500 in North Park compared with a countywide average of $1,954, Chitayat said.
New Complexes Push Up Prices of Old Units
“What’s happening is these newer projects are primarily being built for upper end renters and they’re also pushing up existing building rents when you come to do a renovation,” Chitayat said.
Ironically, it was the lower rents in North Park compared with Bankers Hill that got people interested in moving there, said Victor Krebs, a senior vice president with Collier’s International.
“Then there started to be some cool, modern projects that appealed to young, kind of design-savvy tenants and it was complemented by the great restaurants and cafes,” Krebs said. “I think North Park has a great future with more interesting new buildings, preservation of existing historic areas and adaptive reuse of existing buildings.”
Despite rising rents, demand for apartments in North Park is as strong as ever, with a vacancy rate of about 3 percent in the neighborhood compared with a countywide vacancy rate of about 4.4 percent, Chitayat said.
“There’s not a lot of inventory to pick from,” Chitayat said. “We really don’t see a big uptick in vacancies in this area.”
He said CBRE is predicting that the vacancy rate in North Park will rise slightly, to about 3.6 percent in the first quarter of 2020.