From Landfill to Park in 30 Years

Intimate, Upscale Lounges in Downtown San Diego Offer New Take on Night Life.

Knight Ridder/Tribune Business News May 8, 2004 By Nicole Reino, The San Diego Union-Tribune Knight Ridder/Tribune Business News May 8–In 1999, Greg Strangman opened the Onyx nightclub in the basement of a building he owns at Fifth Avenue and F Street downtown. At the time, Strangman saw dance clubs as the trend in the country’s night-life industry. He modeled Onyx after clubs in New York, Los Angeles and San Francisco.

But for his next venture, Strangman wanted to explore a newer trend: smaller, more upscale lounges. In January 2003, directly above Onyx, Strangman opened Thin, which he calls a metropolitan lounge. “It’s not a restaurant, it’s not a pounding nightclub — it’s in between,” Strangman said.

And “in between” seems to be in. In the past year and a half, more than a half-dozen lounges, including Thin, Side Bar, Yard House Underground and Beach, have opened in downtown San Diego.

Owners describe them as intimate, sophisticated venues where customers can mix and mingle while sipping cocktails. Lounges portray an atmosphere suited for relaxing — comfortable seating, dim lighting and subdued music. Although most lounges have music provided by disc jockeys, the volume is at a level in which people can carry on conversations. And because the music is mellower, dancing is not a focus of attention. Many of the lounges don’t have dance floors.

“I’m definitely into the lounge-type place,” said Vincent Lassoff, 28, of Mission Beach. “I like to have a chill environment. I like to sit down and talk to my friends. I like to be able to hear my friends.” Lounge owners are targeting a specific demographic — 25- to 40-year-old working professionals. They said San Diego is attracting more working professionals who want a cosmopolitan lifestyle and upscale nightspots such as those in New York, Los Angeles and Las Vegas. “You have to know your market,” said Bronson Olimpieri, general manager of V Bar in the Venetian hotel in Las Vegas. “And San Diego is the next booming market.” Olimpieri said San Diego has evolved from a beach city into more of a metropolitan community. downtownsandiegonow.net downtown san diego

“There’s so much happening in San Diego with this whole urban renewal,” said Harald Herrmann, president of Yard House Restaurants. “San Diego has an audience looking for venues like this.” Yard House, which has six restaurants in California and one in Colorado, opened a lounge — Yard House Underground — in San Diego in May 2003. The San Diego Yard House is the chain’s only outlet with a lounge. Lounge owners said they are targeting a group with more disposable income than typical nightclub customers. By doing so, they can offer services with greater profit potential.

For example, when Demien Farrell opened Side Bar, a lounge at Market Street and Sixth Avenue, he began “bottle service.” With bottle service — a concept originating in New York — a table of customers pays $250 to $500 for a bottle of alcoholic beverage and the lounge provides mixers. Side Bar, which opened in January 2003, requires all customers who want to sit at a table on Friday and Saturday nights to pay for bottle service. “We just have an overwhelming response for reservations,” he said. “We’d be crazy not to (do bottle service).” Analysts said one factor in the trend toward lounges is the cost of real estate.

“With the new ballpark and all these high-rise condos (being built), it’s making downtown San Diego very expensive,” said George Whalin, president of Retail Management Consultants.

Mike Viscuso, who owns four nightclubs downtown — On Broadway, Red Circle Cafe, Deco’s and E Street Alley — said rents downtown have more than tripled over the past 10 years. A 30,000-square-foot nightclub now might cost the owner $160,000 a month, he said. downtownsandiegonow.net downtown san diego

“Very few people can afford to do something like that,” Viscuso said. “There’s a lot of small spaces out there, so people are trying to get creative and do this lounge-type feel.” Viscuso said he, too, wants to open an upscale lounge. He said he’s planning three night-life projects in San Diego, one of which is to be called the Cat House Lounge.

Viscuso said the hotel industry has also realized there is money to be made by incorporating lounges into their properties. The W San Diego hotel, which opened in late 2002, has three lounges — Magnet, Beach and the Living Room. The Living Room is simply the lobby of the hotel. W gave the lobby a lounge feel — with a bar, music and comfortable chairs — and has attracted large crowds.

Rob Stirling, marketing and sales director for the W, said the lounges help increase the hotel’s revenue because they attract the local crowd in addition to the hotel guests. Demand is so strong on weekends that there is a line of people around the building.

Beach, a lounge on the W’s rooftop, is particularly popular with the locals, Stirling said.

“As you look at some of the success that we’ve had and you look at a lot of the hotels coming (to San Diego), they’re looking at incorporating some of the components of what we’ve done,” Stirling said. Hard Rock Hotel, scheduled to open downtown in 2006, plans two lounges, possibly including a rooftop lounge, said Trevor Horwell, vice president of Hard Rock Hotels and Casinos.

Analysts said they foresee more lounges opening as more hotels go up and as downtown continues to grow.

However, Viscuso said that doesn’t mean the nightclub business is dead.

Moreover, like with any trend, he said it’s hard to predict how long the boom will last.

“I’ve seen the trends of everything change,” Viscuso said.

RANKY, RNK,