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Grubb & Ellis/BRE Commercial sees Otay Mesa fulfilling long-term potential

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The once anticipated "future" hub of San Diego's industrial sector is no longer something to anticipate -- it's now a reality in Otay Mesa.

According to Grubb & Ellis/BRE Commercial industrial property experts Darren Mullins, Erik Parker, Regan Tully and Rudy Mendoza, the Otay Mesa industrial sector comprises approximately 9.7 million square feet of space in 169 buildings. The Grubb & Ellis/BRE brokers concur that with the completion of more than 736,000 square feet of space in projects currently under way, Otay Mesa is on its way to becoming a prominent regional industrial hub.

"While it's interesting to note that Otay Mesa's industrial base has more than doubled from 4.6 million square feet since 1998, it's more important to understand that for nearly 20 years Otay Mesa has been a location favored by many larger industrial users because of its existing opportunities and its future potential," Mullins said.

Parker added "the Otay Mesa industrial market soon will surpass 10 million square feet, making it more than 25 percent larger than the combined industrial sectors of National City, Chula Vista and San Ysidro. This includes the completion of just four of the projects under way -- One Piper Ranch, Brown Field Distribution, Trepco West Distribution Center and Legacy Ocean View Corporate Center."

The Otay Mesa plateau is the foundation for the city of San Diego's southeastern-most community. At well over 10,000 acres on either side of the U.S.-Mexico International Border, Otay Mesa's expanse of flat, developable land caught the attention of major multinational manufacturers with the 1985 opening of the Otay Mesa Port of Entry.

Now, the Port of Entry is the largest commercial crossing on the California/Mexico border and one of the busiest commercial land border crossings in the United States. Otay Mesa's evolution from farms and ranches to a major hub of diverse industrial users also has been aided by its proximity to the three major freeways (Interstate 5, State route 125, state Route 905), Brown Field Airport, the Tijuana International Airport and the development of several new master-planned communities with retail, educational, environmental and recreational facilities.

Presently, large distribution enterprises account for about 81 percent of Otay Mesa's industrial base, followed by manufacturers (17 percent) and small incubator firms (2 percent), according to Grubb & Ellis/BRE Commercial's Mullins and Parker. The industrial sector mix is not surprising given the vibrancy of maquiladora operations in San Diego and Tijuana, the brokers said.

One of Otay Mesa's most attractive attributes has been its availability of developable land. But over the last 12 months the supply of vacant finished lots has rapidly diminished, while asking prices have soared by about 30 percent. To better serve enterprises seeking Otay Mesa sites and facilities, Grubb & Ellis/BRE Commercial recently opened a satellite Otay Mesa/South Bay office at 2320 Paseo de las Americas, headed by Tully and Mendoza.

"The Otay Mesa industrial market has just over 1,282 acres of finished land within 15 existing subdivisions, which equates to 514 lots ranging in size from 0.5 to 19 acres," Tully said. "But the demand side of the market is clearly on the upswing."

"Today, there are just seven lots totaling 14.43 acres available for sale, which has caused asking rates for finished land to jump to a range of $8.50 to $12 per square foot - an increase of about 30 percent in just a year," Mendoza said, adding that the lots are in business parks with assessment bonds in place to cover infrastructure costs.

Still, with significant investments in the San Diego/Baja California region already made by such major corporations as Sanyo, Sony, Honeywell and Panasonic, and the potential of another border crossing less than two miles from the existing Otay Mesa Port of Entry, the Grubb & Ellis/BRE Commercial experts conclude the growth of Otay Mesa as a major industrial hub will continue rapidly.

For more information about Grubb & Ellis/BRE Commercial, visit www.brecommercial.com.


Submitted by Grubb & Ellis/BRE Commercial

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