San Diego A $190 million industrial park is starting to take shape on a 311-acre site along the U.S.-Mexico border in Otay Mesa near a new border crossing that’s still in the planning stages.
Kearny Real Estate Co. in partnership with PCCP LLC recently broke ground on the 40-acre first phase of the Otay Crossings Commerce Park project, estimated to cost between $40 million and $50 million to develop.
The groundbreaking comes within weeks of when Solana-Beach-based Chesnut Properties unveiled plans for a $500 million office campus in Chula Vista to the west.
The Chesnut Properties project will have 1.4 million square feet of space with the potential to grow to up to 3 million square feet, according to Lee Chesnut, principal and founder of Chesnut Properties.
Jeffrey Givens, senior vice president of Kearny Real Estate, said as the lead in Otay Crossings, his company is in the process of grading the land and installing a sewer line and other infrastructure.
“We would have lots that we could start to develop by the summer, early fall of 2019,” Givens said.
Tentative plans are for L.A.-based Kearny Real Estate and PCCP to sell finished lots that others would build on, although Givens said the companies would build-to-suit if tenants request it.
“We can accommodate someone that’s looking for a million-square-foot building to someone who wants to build a 25,000 square-foot building with a yard in back,” Givens said.
Kearny Real Estate and PCCP also may put up some buildings on speculation.
“Over the next 12 to 18 months, we’ll pull together plans on what to sell as lots,” Givens said.
The site is along the final extension of state Route 11 that would connect Interstate 905 and state Route 125 to the border.
“We sit at kind of the crossroads of the major freeways that are being developed,” Givens said.
The site also is one mile west of the planned new border crossing.
About 120 acres of the site have been set aside for CalTrans to complete the 1.8 mile final portion of state Route 11 and the new border crossing.
Kearny Real Estate and PCCP acquired the land in 2007 with the expectation that South County would soon become the next hot market for commercial real estate development.
“The primary driver of this is the lack of industrial product and the lack of industrial availabilities in the county,” Givens said. “San Diego in general has a vacancy rate of 5 percent and in the middle part of the county, it’s virtually nonexistent.”
Most of the recent development of industrial and commercial land has been in North County, but that’s fast disappearing.
“The remainder of the product that’s available is South County, and particularly Otay,” Givens said.
With its proximity to Mexico, Givens figures Otay Crossings will be attractive to companies with business on both sides of the border, even with NAFTA (North American Free Trade Agreement) up for renegotiation.
“No matter what happens with NAFTA, Mexico will remain the United States’ third largest goods trading partner with nearly $600 billion passing through our borders,” Givens said, adding that the proximity of Otay Crossings to the new border crossing will enable tenants to take advantage of that market.