Horton Plaza redevelopment faces yet another setback after failing to sell at auction

SAN DIEGO (FOX 5/KUSI) -- Horton Plaza was once considered the centerpiece of downtown San Diego, a prime example of what can happen when you do things right.

"It changed everything downtown, it was the first of three important anchors downtown -- Horton Plaza, the convention center and obviously Petco Park," said Gary London, a real estate consultant.

But with a statue of Alonzo Horton watching over, Horton Plaza is making headlines for another reason -- a prime example of what can happen when things go wrong.

"It's kind of an abomination, actually," London stated. "The reality was when Stockdale, the developer, purchased the old Horton Plaza shopping center with the promise that they were going to develop it as a high-technology-oriented office campus, it was a very exciting moment."

Looking around the property in the present day, the conversion from shopping mall to office
complex is almost complete, with developer Stockdale Capital Partners taking out a $360 million dollar loan to make that transformation.

However, on Monday, the property was returned to Stockdale's lender, the global investment firm AllianceBernstein, after a public auction at the East County Regional Center.

At 700,000 square feet, Horton Plaza is big enough to house most, if not all, offices at San Diego City Hall, a concept that has captured the attention of the city council.

"The disappointing part of it is that the city of San Diego wasn't at the auction," London said. "They could've purchased what was a $400 million dollar asset, between the bank and the developer's money, for a $130 million, and they didn't step up to do it."

Once the smoke clears and all the legal issues are hammered out, Horton Plaza will be put on the block again.

For London, it would be a golden opportunity to transform the area.

Watch the full report by FOX 5/KUSI's Dan Plante in the video player above.