INDUSTRIAL PROPERTY SHOWCASE

San Diego

Industrial Market News — San Diego County | Otay Mesa & high-growth submarkets

Otay Mesa is the county’s industrial heartbeat — home to most large blocks under construction and the focal point for cross-border logistics. The market shows pockets of large build-to-suit (BTS) activity, notably a 1.1 MSF Amazon BTS and institutional pipelines (multi-million-SF parks), while countywide absorption and starts have softened in 2024–2025 amid broader economic headwinds.

Deals About Town

• 1.1M SF Amazon BTS — Otay Mesa: Amazon is the anchor of the current large-block activity in Otay Mesa with a reported ~1.1 million SF build-to-suit under construction. This single deal accounts for a very large share of the county’s active pipeline.
• Otay Mesa = Development Concentration: As of Q1/Q2-2025 Otay Mesa accounted for the lion’s share of industrial product under construction in San Diego County (roughly 1.7–2.2 MSF of the county’s pipeline depending on the report).
• Large Institutional Parks & Spec Development: Developers (Majestic, Elevation Land, Prologis and joint-ventures) are actively pursuing multi-phase parks in Otay Mesa — projects ranging from >1.1 MSF to ~1.8 MSF in announced or planned build-outs. These projects are being positioned for institutional or large single-tenant users.
• Countywide weakening absorption: San Diego County recorded continued negative net absorption in early-to-mid 2025 with rising vacancy compared to historic lows — a cyclical softness amid a still-active development pipeline. This tempers near-term upside except for the most functional, border-proximate product.
• Other booming pockets: Beyond Otay Mesa, pockets of activity and demand exist in Mid-County / Miramar, Carlsbad / North County, and Kearny Mesa/Sorrento Mesa for specialized R&D, life sciences, and last-mile logistics. However the largest contiguous blocks and new-land opportunities remain centered in Otay Mesa.

Large Transactions & Build-to-Suit / Pipeline

1. Amazon — Otay Mesa Build-to-Suit
   • Type: Build-to-Suit (BTS) fulfillment center
   • Size: ~1.1 million SF
   • Status: Under construction / leading the county pipeline (Q1–Q2 2025).
   • Why it matters: Single largest block in county pipeline and a major vote of confidence for Otay Mesa’s border logistics value.
2. Elevation Land / Crow Holdings JV — Otay Mesa Industrial Park
   • Type: Institutional speculative / multi-building park
   • Size: ~1.8 million SF
   • Status: Development announced
   • Why it matters: Adds large institutional product and scale to an already concentrated Otay Mesa supply pipeline.
3. Majestic Realty — Landmark at Otay / Landmark Phases
   • Type: Multi-building Class-A industrial park expansion
   • Size: >1.1 million SF (planned/full-build out across phases per developer releases)
   • Status: Phased expansion underway / lands assembled.
   • Why it matters: One of the archival large developers expanding Otay’s capacity for big-box distribution and regional logistics.
4. Other notable pipeline references
   • Total SF under construction (county): roughly ~2.0–2.5 MSF at various points in 2024–Q1 2025 — with ~1.7–2.2 MSF concentrated in Otay Mesa depending on source.

Note: Many planned projects — 6+ MSF proposed countywide, are in various entitlement or financing stages — availability and delivery timing remain fluid because of financing and labor conditions.

Market Context — What this means for occupiers and owners

• For occupiers: If you need large contiguous blocks (>200k SF+) or a cross-border logistics hub, Otay Mesa is the obvious primary target — but expect developers to push BTS and forward-commitments for strategic tenants. Smaller occupiers (20k–200k SF) will still find options across the county, but those seeking coastal or life-science proximate product will look to Miramar, Sorrento Mesa, and North County clusters.
• For investors/owners: Premium is paid for modern, border-proximate, well-serviced product. However, recent negative absorption and the prospect of delivery of new speculative blocks advise disciplined underwriting around lease-up timelines and tenant credit. Institutional developers (Majestic, Elevation, Prologis) are selectively advancing projects—watch their entitlements closely.

Market Notes: Who’s Hot Now

• Otay Mesa / East Otay Mesa: Dominant for large logistics, cross-border; most new land and large blocks.
• Miramar / Kearny Mesa / Sorrento Mesa: Strong for R&D, life sciences support, and smaller institutional industrial; rental resilience for lab/flex conversions.
• Carlsbad / North County: Niche industrial and advanced manufacturing | pockets of build-to-suit and redevelopment.

Transportation Snapshot

• Border / Cross-Border: Otay Mesa Land Port of Entry — busiest commercial POE in California and a key driver for regional trucking and cross-border supply chains.
• Highways & Freight Routes: I-805, SR-905, SR-125, I-5 provide immediate truck routes; I-15 and I-8 connect to inland and eastbound corridors. Otay’s direct links to SR-905 are critical for last-mile and cross-border freight. County of San Diego
• Air & Sea: San Diego International Airport ~20–30 min (city central); Brown Field (regional) and proximity to the Port of San Diego support intermodal options for certain supply chains. City of San Diego+1

Bottom Line — Tactical Takeaways

• If you need big blocks or a border logistics node, Otay Mesa is mission-critical — expect BTS to be the primary route to secure large footplates in the near term (Amazon’s 1.1M SF is the top example).
  
• If you own or are acquiring flex/R&D product (20k–200k SF), target Miramar, Kearny, and select North County submarkets for stability — and expect selective demand premiums for modern, well-located product.

Links

Argossy International Properties
San Diego Economic Development Dept.

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