4th and B site, next to downtown San Diego’s crumbling California Theatre, is for sale

The owner of the vacant property at the corner of Fourth Avenue and B Street in downtown San Diego — a neighbor to the infamous, decaying California Theatre — has decided to sell the partial-block site instead of building a hotel-and-office, skinny tower as planned.

Last week, Tokyo-based housing developer Iida Group Holdings Inc., listed the 0.35-acre property at 345 B St. for sale. The company purchased the site in March 2016 for $7.5 million, according to public records.

Commercial real estate firm Newmark is managing the listing. The seller, through Newmark executive and listing broker Erik Anderson, declined to comment for this story.

The decision to sell puts in limbo the owner’s 30-story, mixed-use skyscraper project, and opens the door to a larger redevelopment opportunity in a particularly bleak part of downtown San Diego.

“What Iida has entitled there is beautiful. Someone with a long-term vision could build something special there,” Anderson told the Voice of San Diego, which first reported that the property was for sale. “That’s a tough plan, though, right now. There’s a large office component to that. High-rise costs are prohibitive at this time. We’ve gotten some interest from groups who think they can pull that off, but there’s a whole lot you could do with the site. It’s a blank slate.”

Taking up just 15,063 square feet of space, the site in question — the former home of the once-celebrated 4th and B live music venue — is small in size but of outsized significance.

The fenced-off property shares a block with the abandoned California Theatre building at 1122 Fourth Ave., and is across the street from the city of San Diego’s unimpressive Civic Center compound.

The 0.58-acre theater property is also for sale and must be sold by the end of next year (or the buildings demolished soon thereafter), per the terms of the bankrupt owner’s legal settlement with the city. The city’s real estate is not currently for sale, but there has been a push by some city leaders and third parties in recent months to reconsider the prospect of offloading the land for redevelopment.

Iida had been working with the city of San Diego’s Development Services Department since May 2023 to secure a building permit for a 400-foot tower with 301 hotel rooms, 59,800 square feet of office space and 10,400 square feet of retail space.

The company was nearing the end of the building permit review process, said Brian Schoenfisch, who heads the city’s Urban Division. A new owner could resume the permitting process, he said, so long as the proposed project isn’t altered substantially. Or the buyer could submit a new application for something different, as most downtown developments are approved through a by-right ministerial building permit process, Schoenfisch said.

Now, however, there is hope that a new owner will scrap the project, and instead view the 4th and B site as a piece of a larger puzzle that could bring about profound change to the surrounding area.

“This is exactly the stars aligning,” said real estate analyst Gary London, who refers to the area as the black hole of downtown.

“Now we have a full-block opportunity, and whoever develops it can scale a project that could be meaningfully delivered, whereas previously, chopping up the block into maybe a residential high-rise, maybe an office high-rise, maybe something else just doesn’t make sense,” London, a principal of London Moeder Advisors, said. “My wish would be for the various parties to now recognize that even though there’s different ownerships of the block, that their best position is to coalesce into a unified sales strategy and see if they can pull off the sale to one buyer.”

As it stands, the brokers have talked, but the properties are being marketed separately, said Jason Kimmel, an executive with CBRE and one of the California Theatre’s listing agents. Kimmel said the California Theatre property has received a lot of interest and CBRE will formally solicit offers next week.

The for-sale parcels also share the block with an Ace surface parking lot that has two separate owners. The north half, a 0.23-acre site along Third Avenue, is owned by Hall Fish Investments, according to information provided by the county assessor’s office. An entity going by the name 1131 Third Ave LLC owns the southern 0.23-acre portion of the parking lot.

London said he has spoken with prospective buyers of the California Theatre property. They have so far balked at the proposition of demolishing the dilapidated structure, preferring instead to wait until the legal settlement obligates the owner to tear it down, especially given that time is not of the essence in the current real estate cycle, he said.

But the 345 B St. listing changes the calculus, London said.

“It’s a matter of scale, and the reason that it’s an opportunity is not just because the contiguousness of the property, or even the lack of market demand for single uses … it’s the fact that this is the first step to (rehabilitating) a relatively destroyed C Street and now B Street, with the office debacle,” London said. “A full-block project — or better yet a full-block project plus the Civic Center redevelopment project — could really lay the foundation for it to be the western anchor to the linear redevelopment of both C and B streets.”