Site work is wrapping up on the $40 million first phase of what will become the 311-acre Otay Crossings Commerce Center at the eastern edge of Otay Mesa along the U.S.-Mexico border.
Kearny Real Estate Co. in partnership with Pacific Coast Capital Partners entitled the property and is finishing infrastructure work and grading on 85 acres of the property
Taken as a whole, Otay Crossings Commerce Center “is the largest industrial development since before the Great Recession,” said Jeffrey Givens, senior vice president of Kearny Real Estate Co.
The first phase of the development site includes a 40-acre emergency driving course for the California Highway Patrol. The rest of the first phase is being marketed to builders as potential warehouse space.
The site is adjacent to the planned new U.S Port of Entry and along the final extension of state Route 11 that will connect the existing state Route 905 and 125.
“It’s a very appealing location because they’re sitting right at the Otay Port of Entry,” said Linda Greenberg, principal of the commercial brokerage firm Lee & Associates. “Logistically, this is a perfect location.”
Greenberg said Otay Crossings would likely appeal to medical device manufacturers in Mexico who do business in the U.S. and need to move their goods quickly after storing them briefly in warehouses on the U.S. side of the border.
“For people who just have generic warehouse requirements, they might select other locations in Otay but if you’re bringing product up, it’s very conveniently located property,” Greenberg said. “It took them (Kearny Real Estate Co. and Pacific Coast Capital) a little while to get all of their entitlements, but it’s a good move for them.”
Close to Amazon
Givens said Otay Crossings also should benefit from its proximity to a 2.6 million square-foot distribution center being built for Amazon by Seefried Properties on a 65-acre site at Otay Mesa Road and Enrico Fermi Drive.
“Our site sits less than a quarter mile from where that new Amazon building is going to be. We expect there will be some of those ancillary uses that need to be in the general vicinity of where this Amazon facility is slated to be built,” Givens said.
Otay Mesa is one of the few areas in San Diego County with industrial land available, and the region has drawn considerable investor activity as a result.
Among the more recent, Sudberry Properties has started construction of the 409,500 square-foot Otay River Business Park within the city limits of Chula Vista and Sunroad Enterprises last year partnered with Majestic Realty Co. for development of a three-building industrial park in Otay Mesa that will have a total of 227,000 square feet.
Unlike Otay Crossings, much of the Otay Mesa land that is available is not at the stage where it’s ready to build on. It looks like there’s a lot of land,” Givens said, but “there’s really a limited number of places in a tight market where users can go to find this type of product.”
Cindy Gompper-Graves, president and CEO of the South County Economic Development Council, said Otay Crossings “gives us room for new companies to get their foot in the door here as we plan for the future.”
“With the construction of state Route 11 underway and the new port of entry opening up in the future, improving existing routes for the shipment of goods that are manufactured in Tijuana, it will be a great asset to companies on both sides of the border,” Gompper-Graves said. “We’re a little bit constrained on our industrial space so adding new commercial-sized industrial space to our area is always good. You never want to wait until you need it because the construction time is too long. You always want to build in anticipation because they will come. They always do. ”
Bought in 2007 for $23.4M
Kearny Real Estate and Pacific Coast Capital acquired the Otay Crossings site in 2007 for $23.4 million.
“It took us 10 years to get to the point where we could break ground,” Givens said. “The big picture plan was to take advantage of this new infrastructure coming to Otay Mesa, then provide an industrial commerce park that is uniquely located for the types of businesses that would want to populate this area and region.”
The two firms began work on the site in 2017.
“When we looked at it a long time ago, Otay was an up-and-coming market,” Givens said. “Otay Mesa is one of the last kinds of frontiers for pure industrial plays in all of San Diego County. Kearny Mesa and Miramar are pretty much built out.”
The expectation is that the industrial park will attract a mix of businesses that would likely include trucking, and trailer storage.
Trailer Yards Needed
“There’s a huge demand for trailer yards,” Givens said. “It’s hard to find zoning anywhere in San Diego County that allows you to do that kind of use. Most municipalities don’t like that. They want someone to build a nice, clean looking building.”
With the road improvements, “There’s some new interest and demand that hasn’t been there in the past,” Givens said, adding that he expects demand for industrial property to grow.
“If you look at the number of trips that cross the border and how integrated that market has become, I don’t see that shrinking or coming down. I think that’s only going to become greater,” Givens said.
Kearny Real Estate and Pacific Coast Capital are marketing Otay Crossings finished lots of 1.5 acres to 25 acres at $15 to $17 a square foot, Givens said.
“That’s a very good price for finished land in a master planned business park,” said Greenberg of Lee & Associates.
Additional stories from the San Diego Business Journal are available here. Sign up for their free daily email newsletter.