Who will save Horton?

San Diego's Horton Plaza Redevelopment Hinges on Convention Center Integration

AllianceBernstein's $550 Million Acquisition Could Transform Downtown, But Political and Financial Hurdles Remain

SAN DIEGO — The future of downtown San Diego's most prominent vacant property now rests with AllianceBernstein LP, the New York-based investment firm that acquired the shuttered Horton Plaza retail complex through foreclosure, setting up a high-stakes redevelopment scenario with implications stretching far beyond real estate.

The 10-acre site, spanning seven blocks between First and Fourth avenues, represents what multiple observers describe as a once-in-a-generation opportunity to reshape San Diego's urban core. With up to 772,000 square feet of potential office space, the property's ultimate configuration could determine whether downtown experiences renaissance or continued decline.

Three distinct scenarios have emerged from interviews with city officials, developers, and civic organizations, each carrying dramatically different implications for the region's economic trajectory.

The Best-Case Scenario: A $1.5 Billion Convention Campus

In the most optimistic outcome, the former Macy's anchor building becomes the cornerstone of an integrated convention district that addresses San Diego's most pressing infrastructure limitation: inadequate meeting space.

The San Diego Convention Center, despite generating a record-breaking $1.5 billion in regional economic impact during fiscal year 2024, operates under severe capacity constraints. The facility currently loses 1.3 million hotel room nights annually due to space limitations, according to convention center data.

"This represents a potential game-changer for our convention business," said Clifford Rippetoe, president and chief executive of the San Diego Convention Center Corporation. Comic-Con International alone generates $161.1 million annually, but the center's 615,700 square feet of exhibit space ranks it just 24th among North American facilities.

The Winning Formula: Complementary Venue Integration

A Horton Plaza convention integration could capture an estimated $225 million to $375 million in additional regional economic impact annually by accommodating larger events and recovering lost bookings. The model has precedent in Las Vegas, where convention activities spread across multiple venues within an integrated district.

The winning formula centers on creating complementary rather than competing facilities. While the main convention center excels at large trade shows requiring massive floor plates, Horton Plaza would specialize in high-value, smaller-footprint events that command premium rates:

Medical and Life Sciences Hub: The former Macy's building's 200,000+ square feet could accommodate 15-20 simultaneous medical conferences, each generating $3-5 million in regional impact. Medical meetings represent the convention center's highest-value segment, with attendees spending 40% more than average and frequently extending stays for tourism. Target events include:

• American College of Cardiology Scientific Sessions (18,000 attendees, $45 million impact)
• Radiological Society of North America Annual Meeting (50,000 attendees, $125 million impact)
• American Society of Clinical Oncology Annual Meeting (40,000 attendees, $100 million impact)

These events currently rotate between Chicago, Orlando, and San Francisco partly due to San Diego's space limitations.

Technology Innovation Campus: The retail levels could house a permanent "Silicon Beach Showcase" featuring rotating exhibits from San Diego's biotech, defense, and telecommunications sectors. This creates year-round activation while providing premium space for tech conferences like:

• RSA Conference (45,000 attendees, requires breakout from main expo)
• Biotech Week San Diego (expandable from current 3,000 to 15,000 attendees)
• Defense Innovation Summit (new event leveraging San Diego's military concentration)

Corporate Executive Retreat Center: Upper floors would feature "boardroom-style" meeting facilities targeting Fortune 500 executive retreats and board meetings. These events generate $1,000+ per attendee daily spend compared to $400 for typical conventions, with 50-200 person capacities ideal for Horton's configuration.

Dual-Use Revenue Optimization

The facility's design would maximize revenue per square foot through intelligent dual-use programming:

Weekday-Weekend Flip: Medical conferences (Monday-Wednesday) transition to consumer events (Friday-Sunday). The former Macy's atrium becomes a "Gaslamp Events Hall" for weddings, corporate galas, and cultural events, leveraging downtown's restaurant and nightlife density.

Seasonal Programming:

• January-March: Medical conference peak season
• April-June: Technology and innovation events
• July-September: Entertainment and media (complementing Comic-Con)
• October-December: Corporate meetings and holiday events

Premium Hospitality Integration: Partnership with nearby hotels creates "convention packages" where Horton Plaza events include Gaslamp Quarter dining credits, encouraging attendee spending throughout downtown.

Financial Architecture

Real estate advisory firm London Moeder Advisors has outlined what Principal Gary London calls the "died-and-gone-to-heaven strategy": AllianceBernstein would retain office space for city lease negotiations while spinning off the former Macy's building to residential developers, surface parking to hotel developers, and retail portions to specialized operators.

However, the convention integration model suggests a more sophisticated approach:

Phase 1 ($150M investment): Convert former Macy's to flexible meeting space with 25 rooms ranging from 50-500 capacity, plus central atrium for 2,000-person receptions.

Phase 2 ($200M investment): Add 250-room "convention hotel" above retail levels, designed specifically for small-group business travel with enhanced meeting amenities.

Phase 3 ($100M investment): Develop underground connection to convention center, creating seamless campus experience.

Revenue Projections:

• Meeting space rental: $15-25 million annually
• Hotel operations: $40-60 million annually
• Retail and dining: $20-30 million annually
• Parking and services: $10-15 million annually
• Total: $85-130 million annual revenue vs. $25-40 million for traditional office use

"This could deliver triple the current returns on assets while serving multiple public interests," London said, referencing analysis suggesting commercial optimization could generate $800 million to $1.2 billion in total project value.

The Most Likely Scenario: Gradual Private Development

Market analysts and political observers consider a middle-ground approach most probable, characterized by limited city government involvement but active civic organization facilitation.

AllianceBernstein has committed to being "a thoughtful, collaborative owner" and brought on Hilco Global as asset manager while interviewing property management candidates. The firm's Commercial Real Estate Debt platform, with over $10.3 billion in assets under management, specializes in value-add transitional lending for complex urban redevelopment projects.

Under this scenario, Mayor Todd Gloria's opposition to city acquisition holds, but the City Council-commissioned feasibility study provides market intelligence that helps private buyers understand the property's potential. The Downtown Partnership would serve as convener, helping AllianceBernstein connect with potential buyers and tenants.

Nat Bosa, founder and chairman of Bosa Development, has expressed interest in the Macy's portion if the city engages in acquiring office space, noting the city could secure deals for "way less than 50% of the cost of doing anything new."

Daniel Negari, owner of the neighboring office tower at 225 Broadway, said he would consider acquiring both the park lease and 300,000 square feet of retail space, potentially activating Horton Plaza Park as an amenity for downtown workers.

This gradual approach would likely unfold over five to seven years, with piecemeal sales to specialized developers rather than comprehensive master planning. Convention center integration would remain limited to overflow meeting space rather than purpose-built facilities.

The Worst-Case Scenario: Prolonged Vacancy and Decline

The most pessimistic outcome envisions continued vacancy due to a combination of unrealistic pricing expectations, political gridlock, and market conditions that have fundamentally shifted since the original $550 million development.

AllianceBernstein acquired the property through foreclosure proceedings, inheriting a capital structure based on pre-pandemic assumptions about office demand and downtown foot traffic. If the firm maintains pricing expectations tied to the original project cost rather than current market realities, buyers could remain elusive.

Political complications pose additional risks. The ongoing legal challenges to Convention Center expansion—despite recent court victories validating Measure C funding—create uncertainty about public sector partnership opportunities. Attorney Cory Briggs continues to pursue appeals that could delay convention center improvements indefinitely.

"The failure of imagination around this property has been stunning," London said. "If we can't figure out how to activate 10 acres in the heart of downtown, what does that say about our capacity for urban leadership?"

Under the worst-case scenario, the property could remain substantially vacant for another three to five years while various stakeholders pursue conflicting agendas. This would compound existing downtown challenges, including street-level retail vacancies and reduced foot traffic that began during the pandemic.

The economic implications extend beyond real estate. San Diego's convention industry faces competitive pressure from expanded facilities in Los Angeles, Phoenix, and Austin. Further delays in capacity expansion could result in permanent loss of major events to competing cities.

Legal and Financial Framework

Recent court rulings have clarified key aspects of the development environment. San Diego Superior Court Judge Wendy Behan validated Measure C as a citizens' initiative in 2024, meaning the hotel tax increase requires only simple majority approval. The measure would generate an estimated $4.0 billion for convention center expansion over 42 years.

However, appeals are ongoing, with the California Taxpayers Action Network challenging the ruling. Attorney Michael Colantuono estimates resolution could take another year.

AllianceBernstein's real estate debt expertise provides financial capacity for complex redevelopment. The firm recently closed US Commercial Real Estate Debt Fund IV with $1.3 billion in commitments and has secured over $4.5 billion in new capital since 2020.

Convention center economics support integration strategies. The facility generated $29 million in hotel and sales tax revenue during fiscal year 2019, returning $1.80 to the city for every dollar invested, separate from broader economic benefits.

Civic Stakes and Leadership Vacuum

The Horton Plaza redevelopment occurs against a backdrop of broader downtown revitalization challenges, but more critically, it exposes what multiple civic leaders describe as a fundamental leadership vacuum that has paralyzed major infrastructure decisions for over a decade.

The Government Role: From Skeptical to Essential

Mayor Todd Gloria's administration initially dismissed city participation in Horton Plaza acquisition, citing budget constraints and philosophical opposition to real estate speculation. However, the convention center integration model fundamentally alters the public interest calculation.

"The city's challenge extends beyond simply deciding whether to buy office space," noted urban planning expert Gary London. "Municipal government must consider its broader role in downtown revitalization: creating incentive structures, coordinating with civic organizations, facilitating public-private partnerships, and potentially exploring creative solutions that serve multiple public purposes."

Essential Government Functions in the optimal scenario include:

• Zoning and permitting streamlining: Fast-track approvals for convention-related improvements, potentially reducing development timeline by 18-24 months
• Infrastructure coordination: Harbor Drive improvements, pedestrian bridge connections, and transit integration requiring public sector leadership
• Tax increment financing: Establishing special districts capturing increased property values to fund public improvements
• Convention center governance: San Diego Convention Center Corporation board restructuring to coordinate dual-venue programming

Yet Gloria's continued resistance to creative public-private partnerships reflects what critics describe as "small-ball thinking" on transformational opportunities, compounded by the traumatic experience of the 101 Ash Street debacle that has made city leadership deeply risk-averse on major real estate decisions.

The 101 Ash Street Shadow: The city's $202 million lease-to-own deal for the downtown high-rise, approved in 2016, became a cautionary tale of governmental due diligence failures. Despite receiving "thousands of pages of documents" about asbestos conditions from the previous owner, the city proceeded with major renovations that disturbed encapsulated asbestos, forcing employee evacuations in 2019 and leaving the building vacant. The scandal culminated in criminal charges against real estate broker Jason Hughes, who collected $9.4 million in undisclosed fees, and a $132 million settlement to purchase both 101 Ash Street and Civic Center Plaza buildings outright.

The 101 Ash Street experience has created what multiple civic leaders describe as "deal paralysis" within City Hall. As the Union-Tribune editorial board noted, the city has "had a disgraceful record for more than a quarter-century on huge issues," creating an institutional culture of excessive caution that views any complex real estate transaction as potentially career-ending.

"The 101 Ash situation absolutely makes everyone gun-shy about any kind of creative partnership," said one City Hall insider who requested anonymity. "Nobody wants to be the next person explaining a real estate deal gone wrong to voters."

This risk aversion stands in stark contrast to peer cities. Unlike mayors in Austin, Denver, or Nashville who've leveraged convention center expansions to catalyze broader downtown development, San Diego's leadership appears constrained by both budget concerns and institutional trauma from high-profile real estate failures.

Civic Organizations: The Coordination Gap

The Downtown Partnership and San Diego Regional Chamber of Commerce have demonstrated willingness to invest time and resources in analysis and activation, but their efforts lack the coordinating authority necessary for complex multi-stakeholder projects.

Current Civic Organization Roles:

• Downtown Partnership: Tenant recruitment and streetscape activation, but limited capital deployment capacity
• Prebys Foundation: Potential public realm improvements to Horton Plaza Park, historically focused on smaller-scale projects
• San Diego Tourism Authority: Convention marketing and industry relationships, but no development financing capability
• San Diego Regional Chamber: Business community coordination, limited to advocacy rather than project leadership

Missing Civic Infrastructure: San Diego lacks equivalent organizations to Denver's Downtown Partnership (which co-invested $50 million in convention center expansion) or Austin's Economic Development Corporation (which provided $200 million in infrastructure support). These entities combine public authority with private sector flexibility, enabling rapid response to development opportunities.

"We have all the individual pieces," said one civic leader who requested anonymity, "but no quarterback calling the plays. Everyone's waiting for someone else to take the lead."

Private Sector: Capital Without Vision

AllianceBernstein brings substantial financial capacity—the firm's $10.3 billion commercial real estate debt platform specializes in exactly this type of complex urban redevelopment. However, private investors typically require clear public sector partnership and regulatory certainty before committing to transformational projects.

Private Developer Interest:

• Nat Bosa (Bosa Development): Expressed interest in residential components, contingent on city office space acquisition
• Daniel Negari (225 Broadway owner): Potential retail and park activation, seeking broader development coordination
• Hospitality investors: Multiple hotel groups have expressed interest pending convention programming certainty

The business community has shown interest through investors like Negari and Bosa, but private capital alone cannot address the coordination challenges that require public sector facilitation. Private developers need regulatory certainty, infrastructure commitments, and coordinated planning that only government can provide.

The Leadership Crisis: Lessons from Comparable Cities

San Diego's leadership vacuum becomes stark when compared to cities that have successfully executed similar convention center expansion projects:

Austin Model: Mayor Steve Adler personally led convention center expansion negotiations, coordinating city council, tourism authority, and private developers through a single "Convention District Task Force" with clear decision-making authority and 18-month timeline.

Denver Approach: Mayor Michael Hancock established a public-private "Downtown Development Authority" with bonding capacity and eminent domain powers, enabling rapid land assembly and infrastructure coordination.

Nashville Success: Mayor Megan Barry (despite later political troubles) created a "Music City Convention Authority" that combined tourism, development, and transportation functions under unified leadership.

What San Diego Lacks

Multiple observers identify the absence of a single decision-making entity with both authority and accountability as the fundamental barrier to progress:

"There's a failure of imagination," London emphasized. "The people around (Mayor Gloria) may not see this as an apocalyptic moment that will change the course of the city. They need to embrace the fact that this is an opportunity that will never come around again."

Structural Deficits:

• No empowered development authority with financing and coordination capacity
• Fragmented decision-making across city council, port authority, convention center corporation, and tourism authority
• Risk-averse political culture prioritizing avoiding mistakes over capturing opportunities, intensified by the 101 Ash Street trauma
• Limited public-private partnership experience compared to peer cities
• "Deal paralysis" from institutional fear of real estate transaction failures

Potential Leadership Models

Several organizational structures could address the coordination deficit:

Option 1: Horton Plaza Redevelopment Authority - Joint powers authority between city, port, and convention center corporation with dedicated financing and development coordination capacity.

Option 2: Downtown Innovation District - Special assessment district encompassing Horton Plaza, convention center, and adjacent properties with unified governance and tax increment financing.

Option 3: Public-Private Development Corporation - Hybrid entity with city appointment authority but private sector operational flexibility, modeled on successful entities in other cities.

Option 4: Mayoral Task Force with Executive Authority - Direct mayoral leadership with designated decision-making timeline and stakeholder coordination responsibility.

The Time Constraint

As Negari emphasized, "There needs to be a central meeting place for people downtown. Horton was it, and I think that it can be that again."

Whether downtown San Diego's most prominent vacant property becomes a symbol of renewal or continued decline may depend on decisions made in the coming months—particularly whether city government and civic leadership can overcome political divisions and budgetary constraints to forge a coordinated strategy that matches the scale of the opportunity.

The convention center connection offers one path forward that could align multiple interests: expanding San Diego's competitive position in the lucrative convention industry, activating a blighted property, creating year-round economic activity, and doing so through primarily private investment with strategic public facilitation rather than large-scale taxpayer acquisition.

As the U3 Advisors study moves toward completion and AllianceBernstein develops its strategy, the window for coordinated action remains open—but likely not for long. Without decisive leadership to coordinate the multiple stakeholders, San Diego risks squandering what multiple observers describe as a once-in-a-generation opportunity to reshape its downtown core.

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