LaSalle Buys 600K SF Warehouse Near Mexican Border
Industrial facilities in San Diego are in demand as manufacturing shifts to Mexico.
LaSalle Investment Management has purchased a 601K multi-tenant warehouse in San Diego’s Otay Mesa submarket, not far from the US border with Mexico.
The Class A facility, located at 2020 Piper Ranch Road, was sold by Ares Management Real Estate Fund in a transaction brokered by Cushman & Wakefield.
The sales price was not disclosed; Ares bought the warehouse for $109M in 2020. The Piper Ranch warehouse features concrete tilt-up construction with a wide range of bay configurations and 32-foot clearances.
The property offers access to the recently completed California State Route 905 freeway. The warehouse is in proximity to the U.S.-Mexico border and provides convenient access to Tijuana International Airport, the planned Otay Mesa East Port of Entry border crossing, and a new Cross Border Xpress airport terminal, a processing facility with a cross-border bridge that improves domestic and international access.
The project also lies within San Diego’s Foreign Trade Zones and HUB Zone.
The reshoring of manufacturing and supply chains from Asia s creating a surge in new manufacturing facilities in Mexico, which in turn is fueling development of new and expanded industrial space in border towns like Laredo, El Paso and San Diego, as well as Tijuana and Tucson.
Logistics players and investors, including Prologis and Morgan Stanley, now are focused on developing warehouses along the border in Texas and California, according to a report in the Wall Street Journal, which called the trend “nearshoring.”
Morgan Stanley said it is investing in industrial developments encompassing nearly 2M SF on the border.
“Today we’re seeing companies manufacturing goods in Mexico and using north of the border for distribution,” Lauren Hochfelder, co-CEO of Morgan Stanley Real Estate Investing, told WSJ.
Prologis already owns nearly 44M SF of industrial space in Mexico, with occupancy levels that reached 98% in Q4 2022; the logistics giant broke ground last year on 4M SF of new industrial supply in Mexico.
Nearshoring-related relocations and expansions accounted for half of the industrial demand in Mexico in 2022, concentrated in border areas including Monterrey, Juarez and Tijuana, WSJ reported.
According to Prologis, demand for business in Mexico was “the highest ever” last year. The supply chain disruptions during the pandemic caused many manufacturers to speed up plans to move manufacturing from China to Mexico.