Otay Mesa Represents Opportunity for Industrial

Irwin: “The proximity to the larger labor pool, Downtown San Diego and the North Baja market are some of the factors that attracted us to Otay Mesa.”

OTAY MESA, CA—Home of the only new class-A industrial building available on the market, Otay Mesa has the lowest industrial vacancy on record and is ripe for development , Murphy Development ‘s SVP and director of marketing Andy Irwin tells GlobeSt.com. As we recently reported , the firm has completed the 121,970-square-foot speculative Building 18 at the 2.1-million-square-foot Siempre Viva Business Park at 2600 Melksee here. We spoke exclusively with Irwin about the project and the Otay Mesa industrial market. GlobeSt.com: Besides being the first spec industrial building in Otay Mesa since 2006, what makes this project unique or special? Irwin: 2600 Melksee is the only class-A industrial building delivered in Q2 2016 in all of San Diego County. It is the only new class-A building available on the market. Building 18 is designed with optimal features; a very high dock-door count of 1/5000 square feet with an efficient rectangular design is ideal for distribution tenants. We also installed a heavy amount of power, along with a high sewer and water capacity to attract manufacturing users. We can accommodate all types of manufacturers , from large breweries to medical device to defense. No other building available in San Diego has all of the features that we included in our building.

Irwin says no other building in San Diego offers all the features at Building 18 at 2600 Melksee in Siempre Viva Business Park.

GlobeSt.com: How would you characterize the Otay Mesa industrial submarket? Why was this submarket chosen for this development? Irwin: The Otay Mesa industrial submarket is in great shape. With the exception of one building, the market has the lowest vacancy on record. When we decided to proceed with our spec building, there were four competing class-A buildings on the market. All for of those buildings have been leased, allowing ours to stand alone in the market. Demand continues to remain strong. Given the amount of prospective tours we have had at our building, we anticipate a quick lease-up and will begin spec construction on the neighboring Building 17 at 8500 Kerns St. , a 79,050-square-foot, class-A industrial building, very soon. With all of our plans and permits in place for that building, it will take us a very short six months to complete. Buildings 17 and 18 are the last 2 buildings in our 2.1-million-square-foot Siempre Viva Business Park. The land, located in Otay Mesa, was purchased in 1998. The proximity to the larger labor pool, Downtown San Diego and the North Baja market are some of the factors that attracted us to Otay Mesa. Otay afforded us the ability to purchase large tracts of land where we could create large master-planned business parks with corporate landscaping and good freeway access, and we could develop large buildings to cater toward large corporate tenants. Since our purchase in 1998, Otay has exploded in size and benefited from many infrastructure projects over the years, including the Cross Border Express Terminal , Metropolitan Airpark at Brown Field Airport and a new community plan. GlobeSt.com: How would you define the state of spec industrial in the San Diego market? Irwin: There are only three spec industrial buildings (all in the 40,000-square-foot to 60,000-square-foot range) currently under construction in San Diego. A few others are proposed for later next year. When we last saw vacancy rates this low, spec development was happening all over the county. Things have changed this cycle. There is stark shortage of land where developers can build industrial, and most of existing industrial land is unentitled. Most developers halted the entitlement process after the market crash. The process is now taking some developers upwards of eight years to take raw land through the entitlement process. It is very time consuming and very costly to entitle land, including mitigating for any environmental issues, getting through a CEQA challenge, then designing a building or business park and get grading and development permits which conform to new regulatory issues like the new storm-water compliance. We see very little new industrial development in the near future. We are very fortunate to have all of our entitlements in place at our 1-million-square-foot industrial project at our Brown Field Technology Park . We plan to deliver our first spec building at that project next summer. Building 17 in the Siempre Viva Business Park is not only entitled, but also fully permitted, giving us the ability to deliver in a very short amount of time. GlobeSt.com: What else should our readers know about your projects? Irwin: We also own a 31-acre site in Scripps Ranch called the Scripps Ranch Technology Park . We are looking at a spec R&D building at that project and will probably announce something toward the end of this summer.