A four-story distribution center that would be among the largest industrial buildings in San Diego County is being built for Amazon on a 65-acrce site in Otay Mesa.
The four-story building at Otay Mesa Road and Enrico Fermi Drive will have about 2.6 million square feet of space with 1,854 parking spaces, according to plans submitted to county planners by the developer, Seefried Properties based in Atlanta. No start date for the project was given.
The parking will be wired for more than 100 electric charging stations.
The project also will have a 404 square-foot pump house, a 930 square-foot water tank a 940 square-foot bike rack shelter, and a 278 square-foot guardhouse, according to planning documents.
Amazon didn’t respond to requests for information and officials with Seefried Properties said they couldn’t comment.
Seefried has done other similar projects for Amazon, according to Seefried’s website, including a 1 million square-foot building in Macon, Georgia, completed in November 2018 and an 856,000 square-foot building in Salt Lake City completed in August 2018.
David Wick, chairman of the East Otay Mesa Property Owners Association, said Seefried acquired the property to build the distribution center for Amazon.
“This is a great addition. Amazon is a great addition to Otay Mesa,” Wick said. “It’s a lot of automation, so I’m not sure how much of a job generator it will be.”
The property sold for nearly $22.7 million.
Seefried is required as a condition of its permits to make improvements to Otay Mesa Road that would include adding bike lanes and widening the street. Similar improvements are required for Enrico Fermi Drive.
Because Amazon is such a high profile company and because this project is so big, it’s expected to heighten interest in Otay Mesa for industrial construction, according to some commercial real estate brokers.
“With Amazon coming in, there are a lot of groups that follow Amazon,” said Bret Morriss, managing director of Stream Realty Partners in San Diego, adding that it would include industries such as box makers and last-mile distributors
“Two million-plus square feet is certainly going to lead to other jobs and other supporting companies coming in,” Morriss said. “They have a lot of land that they could quickly turn into industrial buildings.”
Linda Greenberg, a principal with Lee & Associates, said it’s difficult to assess what effect Amazon will have on the overall development of commercial real estate in Otay Mesa.
“I don’t think we’re going to know the impact until they’re operational,” Greenberg said. “I don’t know that it will have a lot of impact in the short term on demand for land.”
Least Expensive Submarket
Even before the Amazon deal, Otay Mesa was a strong draw for companies looking for new industrial space, Morriss and others said.
“It’s the least expensive submarket in San Diego, and that’s after above-average rent growth,” Morriss said.
Rental rates in the past few years for industrial space have gone from about 50 cents per square foot to about 70 cents per square foot, Morriss said.
“Other markets have seen pretty good rent growth, but I think that’s the highest in the region,” Morriss said.
CBRE, in a first quarter 2019 report on industrial property throughout South County that included Otay Mesa, said industrial space was extremely tight, with a vacancy rate of 4.2 percent.
Wick of the Property Owners Association said that Otay Mesa in the next five years will have more new development than it’s had in the past 25 years.
‘Ripe for Development’
“Otay’s the last area in the county where there’s large tracts of land where you can develop a large manufacturing or distribution center,” Wick said.
With new roads, sewerage and other infrastructure, “now it’s ripe for development,” Wick said.
In addition to the Amazon property, other large deals in Otay Mesa included 51 acres bought for $30 million in April by Copart Inc., an online vehicle auction company based in Dallas.
Majestic Realty Co., headquartered in Los Angeles, in October partnered with Sunroad Enterprises of San Diego for development of an three-building industrial park in Otay Mesa with a total of 227,000 square feet.
Murphy Development Co. in January completed construction of the final building in the Siempre Viva Business Park in Otay Mesa. The park includes 2.1 million square feet of industrial space on 155 acres near the Otay Mesa Port of Entry.
Rob Hixson, CBRE senior vice president who represented the seller in the Copart deal, said not only is more land available than elsewhere in the county, but “the freeways that have been built over the past few years are creating more easy access to the buildings.”
“Now, people aren’t complaining like they used to,” Hixson said.
In the past, Otay Mesa’s big draw was its proximity to Mexico for companies that did business on both sides of the border.
That’s still true, but Wick said the next wave of commercial real estate development won’t be so centered on cross-border business.
“You will start seeing more and more businesses going to Otay that may not do business with Mexico,” Wick said. “I could see more distribution type businesses relocating there.”
Real estate reporter Ray Huard may be reached at firstname.lastname@example.org or