Lowe Wraps Up $188.5M First Phase of San Diego County Office Project Under Budget

The new operations center is sprouting up at the site of the original center, which, as the county determined after doing a little research in 2005, would cost in excess of $216 million to maintain over a 20-year period.

October 18, 2010
By Barbra Murray, Contributing Editor

Lowe Enterprises is serving as master developer of San Diego County’s $500 million County Operations Center project in the city’s Kearney Mesa area, and has given local officials some news that anyone in the midst of a development endeavor wants to hear. The real estate company has just completed the $188.5 million first phase of the 1 million square-foot project ahead of schedule and, more importantly, under budget.

The new operations center is sprouting up at the site of the original center, which, as the county determined after doing a little research in 2005, would cost in excess of $216 million to maintain over a 20-year period. With an eye toward efficiency and long-term value, officials worked with RJC Architects to design the new complex, which is being built to meet the requirements for LEED Gold certification from the U.S. Green Building Council.

The new multi-structure campus will be erected in three phases. It was in March 2009 that Lowe, acting through its subsidiary, Lowe Enterprises Real Estate Group-West, Inc., began demolition of four of the property’s existing structures to make way for the construction of the two four-story, 150,000 square-foot office buildings and seven-level, 1,800-space parking facility that comprise phase one. The Operations Center development schedule had called for Lowe to conclude construction of this initial segment of the project in February 2011.

With Lowe having completed the first phase of the project four months in advance, the timeline for the start of the second phase has been nailed down for January 2011, instead of the previous, broader window of winter 2011. The second round will add two more 150,000 square-foot office buildings and a 20,000-square-foot facility containing a conference center and cafeteria. Phase three will yield the final two 150,000 square-foot office buildings and the second parking facility. The original timeline calls for the entire project to come to an end in the spring of 2014, but with Lowe at the helm, perhaps that date should be marked in pencil.

The pricing of construction materials is likely to have helped Lowe keep building costs down to a minimum. But that downward spiral in materials prices that began in 2008 is either at its end or very near it. Ultimately, the change in materials costs for 2010 will hover between no change at all and a 4 percent increase, while the projected change for 2011 is an increase of between 3 percent and 8 percent, according to a construction and materials outlook report released by the Associated General Contractors of America last month. Even during the first quarter of this year, the writing was on the wall.

“Owners should take heed: the double delight of plentiful bidders and falling materials prices appears poised to end soon,” Ken Simonson, chief economist with AGC, wrote in a report in March. “If they want the most value for their construction dollar, now is the time to buy.”

While Lowe can partially attribute its success in coming in under budget on the Operations Center project to low materials costs, it can probably take sole credit for coming in ahead of schedule.