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City chooses Brookfield, ASM to develop new San Diego arena

After both bidders submitted revised plans that included an increased likelihood of a new arena, the city of San Diego settled on a plan from Brookfield+ASM Global Development for the redevelopment of the 48-acre Pechanga Arena site.

Brookfield+ASM Global Development is a partnership between Brookfield Properties and ASM Global (formed last year with the merger of SMG and AEG Facilities). ASM Global is the current operator of Pechanga Arena. Their original plan did not call for renovations to Pechanga Arena, which opened in November 1966. (How old is the arena? It once hosted ABA basketball.) The original Brookfield plan also didn’t feature much in the way of a mixed-use redevelopment, focusing on five acres of public parks, 2,100 housing units and the rest (590,000 square feet) devoted to retail space.

Meanwhile, the competing bid from a partnership between San Diego real-estate developer David Malmuth and developer Toll Brothers Properties, Midway Sports & Entertainment District, is a classic mixed-use development, updating the arena to the tune of $125 million and surrounding it with a 12-acre public park, an additional 3,500-seat music venue, 1,400 housing units, 185,000 square feet of office space, 125,000 square feet of retail space, a 12-acre public park and a hotel.

After feedback from the public, both bidders upped their offers to include a new arena accompanying a new entertainment district, with the specifics to be determined: Midway Sports & Entertainment District, for instance, pegged the cost of a new arena between $300 million for a basic facility to $600 million for a larger-scale project designed for NBA or NHL usage. After both entrants revised their bids to include the potential for a new arena, the city, led by Mayor Kevin Faulconer, chose the Brookfield+ASM Global Development group, citing Brookfield’s experience in developing entertainment district and ASM’s experience in developing and managing arenas.

This doesn’t mean that we’ll see a new arena soon, but it is a big first step as part of a longer journey. The proposal was just a proposal, so now the two sides will begin negotiations on the scope and costs of the development. For instance, the Brookfield plan called for 2,100 housing units in neighboring high rises, but it sounds like that number may need to be adjusted upward to help pay for the new arena. The negotiations will begin with Faulconer and then transition to his replacement as mayor, to be chosen in the fall elections. An arena plan is expected to be submitted to the City Council in first quarter of 2021.

One issue we can see coming a mile away: building a facility to accommodate an NHL or NBA team. It’s no Faulconer is a big booster of pro sports in San Diego; as mayor, he had previously been involved in talks for a replacement stadium for the San Diego Chargers (NFL) as well as a potential MLS stadium and a new San Diego State stadium. Whether his successor sees the need to build a spec pro-sports stadium will be key as the project moves forward.

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