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Mixed-Use Formula Working for OliverMcMillan Downtown

OLIVERMCMILLAN

CEO: Dene Oliver.

President: Paul Buss.

Financial data: Not disclosed.

No. of local employees: 100.

Headquarters: Downtown San Diego.

Year founded: 1978.

Company description: Developer specializing in mixed-use projects combining residential and retail elements.

Key factors for success: Company has nationwide development slate, including stalled projects that it restarts after acquiring them at favorable terms from their original developers.

When San Diego’s OliverMcMillan begins work later this year on a planned $60 million mixed-use development at 12th and G streets in the East Village, it will be betting on a downtown youth strategy that has so far paid off well.

Since the 1980s, the developer has built four other mixed-use projects in the downtown area with the similar configuration of ground-floor retail topped by apartments.

“It’s a loft project that’s been geared to urban living,” says company President Paul Buss, referring to the as-yet unnamed project announced earlier this month and expected to break ground in December, pending city approvals. “These do very well with young people and the students at the nearby schools.”

When it’s completed by fall 2013, the company said it will include 207 apartments and 6,000 square feet of retail space, on a 45,000-square-foot lot. OliverMcMillan, with an affiliated entity known as OliverMcMillanFoster, will develop the project as part of a new joint venture with Chicago-based Capri Capital Partners LLC, a global real estate investment and development firm.

For much of its more than 30 years in business, OliverMcMillan has focused on urban and suburban projects combining commercial and residential elements, working with various combinations of private partners and government agencies to create new living spaces in otherwise undeveloped neighborhoods.

Reviving Stalled Efforts

During the difficult days of the Great Recession, it also managed to find large-scale projects that had stalled under their original developers, but were acquired and completed by OliverMcMillan under favorable investment and financing terms. Those recently included an unfinished condo tower in Hawaii, near which it also is in the process of building its own new mixed-use condo development, as well as revived mixed-use projects in Iowa and Texas.

A big project on its plate is the recently re-started Buckhead in Atlanta, which it acquired last year and where it expects to invest around $300 million to complete the mixed-use luxury-oriented development, billed in the past as Atlanta’s answer to Rodeo Drive.

“We’ve been very fortunate to be able to move projects along during difficult times,” Buss said.

Alan Nevin, principal in the San Diego real estate consulting firm The London Group, noted that downtown mixed-use developments outside of the Gaslamp Quarter have generally been challenging for developers to pull off successfully.

Among other factors, they are required by the city to be low-rise structures with a limited number of apartments, which often makes it difficult for ground-floor retailers to obtain a large regular customer base.

However, he said OliverMcMillan and other downtown developers generally have been able to tap into a popular lifestyle choice for young professionals, particularly those around 20 to 35, who prefer higher-density urban settings with ample social gathering and transit options.

Demand Fuels Construction

Rising demand in that age group has helped fuel projects throughout the downtown area. Of approximately 15 to 20 apartment projects expected to break ground during the next three years in San Diego County — adding between 4,000 and 5,000 units to the local inventory — Nevin noted that at least 13 of those projects are in downtown San Diego.

“We really haven’t seen something like that in seven or eight years,” Nevin said.

Local developers and planners have recently been eyeing underutilized areas of the East Village as places to build on a regular influx of young people attending nearby schools, including NewSchool of Architecture and Design, San Diego City College and the recently opened downtown campus of Thomas Jefferson School of Law.

Long-term planning is proceeding, for instance, on an IDEA district — with the acronym standing for innovation, design, education and the arts — that could bring retail, office and residential elements to the northern part of East Village.

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