Tuesday, August 11, 2020

Prime Coronado Real Estate – Changes Still Unconfirmed

 

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What’s happening with the square block of Orange Avenue between 10th and C? The location of many beloved businesses in Coronado? Rumors are rampant, and current business owners have not been able to provide solid answers.

The sale of the properties was finalized in March, for a reported $22 million. It included properties at 1005-1031 Orange Avenue, 1000-1026 C Avenue and 1116 10th Street, according to the San Diego Business Journal. Collectively, these addresses make up nearly a full square block of prime downtown Coronado real estate and include several addresses on C Ave., including the El Cordova Garage (1000), Coronado Beauty Salon (1010), and Austin’s Gallery (1024); one on 10th St, The Eagle & Journal (1116); and a number on Orange Avenue, including Costa Azul (1031), Bay Books (1029), MooTime Creamery (1025), Leroy’s Kitchen and Lounge (1015), The Attic (1011), Island Surf (1009), Bullshirt (1007).

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These properties represent a large portion of Coronado’s prime downtown real estate. In fact, Tim Kuruzar of CBRE, who represented both buyer and seller on the transaction, said at the time the sale was announced: “[Properties] with this much upside are increasingly rare. Orange Avenue represents an exceptional opportunity to capitalize on recent market shifts toward hip urban restaurants and shopping,” and “The [current] short-term lease structure provides an instant ‘blank canvas’ for the new owner to configure the property according to its highest and best use.”

It is statements like these that concern Coronado residents who appreciate their locally-owned and resident-focused businesses. With the properties being located so close to the Hotel del Coronado, there is concern that the new owner might want to focus more exclusively on the Del traffic, leaving locals with only tourist-type amenities to choose from.

While the current business owners/tenants are not willing to talk on record, a common theme has been that the new buyer has not given current leaseholders much visibility into what the future holds for them. Some have been on month-to-month leases, which makes it difficult for businesses to plan for or invest in the future (even if only in terms of advertising and merchandise stock). And, apparently three or more separate property managers have cycled through over the course of the last six months all bearing intimations of radical increases in lease rates.

Understandably, Coronado residents have been speculating about what will likely happen to the businesses that currently occupy these spots. Anyone who has visited Island Surf knows that it is liquidating stock even now and is closing down shop at the end of the month. Many Coronado residents worry that other local businesses might be pushed out in favor of larger, non-local and possibly more upscale shops.

The purchaser, Kleege Enterprises of San Diego, is owned by Robert Bruce Kleege. Kleege grew up in La Jolla and has been purchasing real estate since founding his company in 1985, after retiring as a professional tennis player.

We can look to some of Kleege’s other recent purchases nearby to try to glean an answer to the question of what will happen to our local businesses. One recent purchase is that of the Clairemont Village Shopping Center, in Clairemont Mesa. In that case, a well-loved local grocery store, Kiel’s, was closed down in favor of a more upscale Sprouts market, who could reportedly afford a higher rent. But, a second purchase, of the Rancho Santa Fe Garden Club, seemed to move in another direction. According to the Rancho Santa Fe Review, Kleege said, “I decided maybe I’ll do something more than strictly investment and do something for the community … my social conscience kicked in. I had the means to buy it and preserve it for the community to use for a long time.”

It’s still unclear what direction Kleege intends to go in Coronado. However, Sue Gillingham, of the Coronado Chamber of Commerce, says that the city requirements as laid out in the City of Coronado Orange Avenue Corridor Specific Plan would preclude many of the things that residents might fear – parking issues, design not in keeping with the character of the town, a big box retailer, etc.  As she put it, the rules “are not for the faint of heart.” Nonetheless, while the city rules will govern what sorts of businesses can go in, they will not necessarily protect the businesses that so many Coronado residents currently love.

Despite repeated calls to Kleege Enterprises, we were unable to get a comment on the firm’s intentions for Coronado.

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Luan Troxel
Luan Troxel
Luan’s background spans a range of industries from academia to management consulting to investment banking. Along the way, she earned an undergraduate degree in political science at Northwestern University, a PhD in the same field from the University of Michigan and an MBA from Columbia University. She has lived on both coasts and many states in between, as well as in Bulgaria and Germany. Have news to share? Send tips, story ideas or letters to the editor to manager@coronadotimes.com
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