Murphy Development Adds 200K-SF to San Diego’s Constrained Industrial Market

Murphy Development is bringing new supply to San Diego’s supply-constrained industrial market. The firm has broken ground on two industrial facilities at Brown Field Technology Park in Otay Mesa totaling more than 200,000 square feet.

“The inventory of class-A industrial buildings throughout San Diego County is at an all time low,” Andy Irwin, a VP at JLL, tells GlobeSt.com. “There is significant demand for good functional warehousing and manufacturing space. We have most of the new construction get pre-leased or leased shortly after it is delivered. Murphy Development delivered a new building in early 2020 and despite the slow down due to COVID, leased a majority of the building within a few months of completion. The continued demand for new buildings by credit tenants has prompted Murphy and a number of other developers to launch new construction to meet this demand.”

The two properties include a 105,150-square-foot building and a 123,913-square-foot building. Both buildings are being built on spec and are scheduled for delivery in the third quarter. “Murphy Development designs buildings that are top in their class,” says Irwin. “A state of the art business park coupled with the best location within the Otay Mesa submarket help to set Brown Field Technology apart from the competition. Their goal is to attract high quality tenants that are looking for a great working environment for their employees.”

Murphy is designing the buildings with heavy power, high dock counts, extremely tall ceilings, and corporate exteriors. This will accommodate the current demand from a variety of users, including manufacturing, warehousing and distribution users. In addition, the properties will be flexible for conversion into R&D and corporate headquarters tenants as the market matures, according to Irwin.

The pandemic slowed leasing activity for most of the year, but began to rebound at the end of the third quarter. “It also caused a major shift in consumer behavior that will have a profound impact on industrial real estate,” says Irwin. “We are seeing an increased acceleration to e-commerce that has resulted in heavy leasing activity over the last two quarters. The nearshoring of manufacturing to Mexico, the growth in biotech manufacturing, and a strong defense sector are also helping to bolster industrial demand in San Diego. The only remaining land for industrial development is located on the periphery of our market.  This has pushed developers to pursue costly teardown and redevelopment projects in the central markets which can be justified due to the high rents that some tenants will pay to be in these locations.”

Looking into 2021, Irwin expects industrial activity to continue to gain momentum. “E-commerce will continue to drive the industrial supply down with a number of large transactions that are in the works,” he says. “Other industries that hit the pause button in 2020 are now showing back up.  We should see a large net positive absorption of industrial space in San Diego this year.”