San Diego County's industrial market has remained healthy through the economic slowdown that has affected much of the nation since 2001.
While San Diego has continued to experience positive absorption of industrial space countywide, the leasing activity has just kept pace with a more modest level of product exiting the development pipeline.
According to recent reports, the county's industrial market posted a third-quarter vacancy rate of 6.5 percent, down from 6.8 percent a year ago. Recent market activity does point to a significant up-tick in space requirements as corporate executives gain confidence in the strength and direction of the industrial economy, especially here in San Diego.
That activity is, however, predominantly occurring in the industrial markets on the periphery of the county, which offer end users newer, state-of-the-art facilities at an economically advantageous price compared to central San Diego.
One example of a market that is poised to take advantage of increasingly strong economic conditions is Otay Mesa. Quickly distinguishing itself as the industrial market to watch in San Diego County, Otay Mesa boasts the largest commercial land border in the state of California and it is also one of the busiest commercial land border crossings within the United States.
Otay Mesa is poised to continue its explosive growth, capitalizing on the soon to be completed extension of Highway 125, which will provide much improved access to Interstate 8 and Highway 52 and East County; the very strong recovery of the maquiladora manufacturing industry in Tijuana; and the emergence of Otay Mesa as San Diego's low cost alternative to meet the industrial needs of the ever growing population base of the South Bay region.
Opus West recognized the increasing demand for new industrial space in Otay Mesa, and acquired a prime 18-acre site at the southeast intersection of Britannia Boulevard and Airway Road.
In the fourth quarter of 2004, Opus West broke ground on the development of a 320,000-square-foot industrial park called Opus Crossings.
Opus Crossings is designed to include eight, institutional-quality industrial buildings, ranging in size from 22,000 square feet to 78,000 square feet with buildings available for purchase or for lease. The first phase of the two-phase project broke ground in October 2004, with completion scheduled for late spring of 2005.
The first phase will comprise four buildings totaling 163,000 square feet. Companies with unique space requirements could have their needs met through the build-to-suit process, if they act quickly.
To underscore the strength of Otay Mesa as an industrial hub, Opus West has two of the Otay Crossing buildings in escrow with offers pending on the balance of the first phase. This activity has all occurred within one year of acquisition and in less than 30 days of breaking ground. For this reason, Opus West believes that Otay Mesa will emerge in the next five years as one of the top industrial markets in the western United States.
There are other key factors that make Otay Mesa a market to watch. Otay Mesa is home to the first dedicated commuter lane, a designated lane that allows approved individuals to cross the U.S.-Mexico border without waiting in long lines.
The region also contains amenities such as an airport, large parcels of value-priced industrial land as well as numerous economic development incentive programs designed to attract companies to the area, according to the Otay Mesa Chamber of Commerce.
There are currently more than 1,200 companies with more than 17,000 employees that already call Otay Mesa home.
In addition, the housing market is strong with more than 11,000 homes under development. The region also benefits from strong regional access via three major freeways, including the 905 and 125 freeways.
While the activity in Otay Mesa is exciting, the overall San Diego County market remains a key area of opportunity, especially as we experience stronger job and population growth throughout the area.
Because of this tremendous growth, Opus West opened a San Diego office to further its local market presence and capitalize on continued strong commercial real estate opportunities in the area. This office will focus on industrial, office, retail, multifamily/luxury condominium and mixed-use development throughout San Diego and South Riverside counties.
The new San Diego office is part of a larger Southern California presence that includes offices in Irvine and Los Angeles. To date, Opus West's development portfolio includes more than 7 million square feet of Southern California product since the company's expansion into the market just eight years ago.
Looking ahead, Opus West's multiple property expertise and depth of development, architecture, construction and financing makes it particularly well suited to capitalize on the current market dynamics especially in key areas such as Otay Mesa.
Opus West's San Diego office is located at 4350 La Jolla Village Drive, Suite 110.
Wood is director of real estate for Opus West.