By Lori Weisberg
A now vacant office high-rise in downtown San Diego will be transformed into a 560-room Hyatt hotel, marking what is believed to be the first such conversion in California in recent years.
The $250 million project, proposed by San Diego-based developer J Street Space, is a slight pivot from earlier plans to convert the 25-story Tower 180 building on Broadway into a combination of residential and hotel uses. The cost of that plan was originally estimated at $140 million.
While office-to-residential conversions are becoming more appealing to developers given the high office vacancy rates in many downtowns and the need for additional housing, J Street is bucking that trend.
Its now revised plan calls for a dual-branded hotel, composed of a 371-room Hyatt Place and a 189-room Hyatt House. While the rooms are different in size and function within the two brands 鈥 with the Hyatt House geared more toward extended-stay travelers 鈥 they will be intermingled within both the tower building and an adjacent eight-story annex.
Topping off the high-rise will be an upscale rooftop bar and lounge that will be known as the Lurline Cocktail Club, which will showcase 360-degree views of San Diego鈥檚 skyline, bay and ocean.
J Street acquired the office complex in late 2023 for $61 million, according to property records, just a few years after the skyscraper got a major facelift. It鈥檚 partly that renovation, in concert with San Diego鈥檚 strong hospitality market, that gives J Street the confidence to proceed with a hotel conversion, its founder says.
鈥淭ower 180 has unique advantages that make the economics work 鈥 the building鈥檚 infrastructure was already updated in 2020, it鈥檚 fully vacant, and it is part of a mixed-use development,鈥 J Street CEO Saj Hansji said in an email to the Union-Tribune. 鈥淎s we鈥檝e continued to study the building and the market, we determined that a hotel concept would be the highest and best use for this property. This approach allows us to maximize the building鈥檚 unique attributes and better serve the strong demand we鈥檙e seeing in San Diego鈥檚 hospitality market.鈥
Hotel real estate broker Alan Reay of Atlas Hospitality said he knows of no other office building in California that has been converted into a hotel. That鈥檚 because developers and property owners have told him the financials don鈥檛 pencil out.
鈥淎 lot of the offices have internal spaces that don鈥檛 have windows, and then you have the cost of putting in individual bathrooms, and just the layout of the floor plans have not worked out,鈥 Reay said. 鈥淒evelopers say it鈥檚 more economical to build from scratch or knock down the building rather than convert it. And they say they can sell those apartments for a lot higher than what they can get for hotel rooms.
鈥淥n top of that, we鈥檙e seeing so many projects being put on hold because the cost of construction has really increased.鈥
The project cost for Tower 180 has grown considerably from the original estimate, which Hansji attributes to the redevelopment鈥檚 expanded scope and density, as well as 鈥減remium amenities like the Lurline rooftop venue, that will make this an exceptional hospitality destination for downtown San Diego.鈥
As for financing, Hansji says J Street has solid relationships with its capital partners, who he does not name, adding that 鈥渢he unique nature of this conversion, combined with the building鈥檚 existing infrastructure and our team鈥檚 track record, has positioned us well in the current financing environment.鈥
As uncommon as office-to-hotel conversions are in California, it鈥檚 not surprising to see J Street undertaking the Tower 180 project, says Joshua Ohl, director of market analytics at CoStar.
鈥淟ast year, over 1,900 market-rate apartments opened in downtown, pushing vacancy into double digits, while we鈥檝e added few hotel rooms there in recent years,鈥 he said. 鈥淣ot having seen the interior layout, the full hospitality conversion likely just made more sense from a financial standpoint, even at that price.鈥
The design for the dual-branded hotel calls for a lobby lounge and market on the ground floor, a breakfast bar with an additional overflow lounge on the second floor, and more than 12,000 square feet of meeting space across the ninth and tenth floors. There is no separate restaurant, nor a pool, although one was originally considered for the rooftop.
Current ground-floor retail tenants, among them Mendocino Farms, Blue Bottle Coffee and Anytime Fitness, will remain, the developer said.
San Diego-based architectural firm Delawie has had to work within certain design parameters dictated by Hyatt, but does have the freedom to imbue the design with a San Diego feel, said Delawie associate Logan Parmele.
鈥淲e鈥檙e pulling in colors and textures you鈥檇 experience in more urban areas, so there are some rust, reddish colors and light steel blues that you鈥檇 see as you travel around San Diego, like the red brick buildings in downtown, and soft sky blue colors,鈥 Parmele said. 鈥淲e鈥檙e also really opening up the ground floor lobby and exposing some of the structural steel there and on the second-floor lounge.鈥
The tower on 180 Broadway was originally built in 1963 as the U.S. National Bank Building, and the annex was added in 1973.
J Street, which originated as J Street Hospitality Inc. in 2011, has completed a number of hospitality projects in the downtown area, including The Courtyard Gaslamp, Hotel Z and the Residence Inn Gaslamp. It recently debuted the 39-room Bower Hotel, the first new lodging property in Coronado in more than three decades. The Bower took the place of the former Villa Capri motel and is located across the street from the Hotel del Coronado.