Otay Mesa, San Diego: Emerging Leader in Industrial Markets

Author Luke McCullough Read bio
Tags: otay mesa San Diego
Date: February 15, 2024

Discover Otay Mesa, San Diego – an up-and-coming hotspot in the industrial market. Positioned on the border with Mexico, this area is becoming a key player in industry. With its prime location aiding cross-border trade and manufacturing, Otay Mesa is quickly becoming a go-to spot for businesses to grow. From innovative manufacturing to strong logistical support, Otay Mesa is poised to be the next big thing in industrial markets.

Otay Mesa Demographics

About 12 million individuals, with 3.1 million aged 18 to 34, reside within a 100-mile radius of Otay Mesa. Additionally, there are 24 million people living within a 250-mile distance.

Otay Mesa Demographics
Source: CBRE Location Intelligence.


According to CBRE Labor Analytics, Otay Mesa’s warehouse workforce, currently 5,952 strong, is projected to increase by 13.5% by 2033. The average pay for a non-supervisory warehouse worker ranges from $19.84 to $22.20 per hour, with an average of $20.71 overall. Otay Mesa is located in the southernmost part of San Diego, along the border of the United States and Mexico. The unemployment rate stood at 4.3% in August 2023, compared to 3.5% the previous year, as reported by the U.S. Bureau of Labor Statistics. During the same period, the state’s unemployment rate climbed from 3.8% to 4.6%.

Otay Mesa labor analytics
Source: CBRE Labor Analytics.

Location Incentives

In the past five years, there have been over 70 economic incentive deals in metro Otay Mesa, totaling more than $130 million. On average, this amounts to about $17,300 per new job, as reported by fDi Intelligence.

One prominent incentive program offered in metro Otay Mesa is the California Competes Tax Credit, highlighted by CBRE’s Location Incentives Group. This program extends through 2028, offering $180 million in tax credits annually to new and expanding businesses in California. These funds can be utilized for capital expenditures, new job creation, and other strategic endeavors to benefit the region.

Logistics Driving Forces

Otay Mesa stands out as one of Southern California’s most robust industrial hubs, thanks to its strategic connection to the U.S.-Mexico border. This proximity fuels significant industrial growth and activity. Serving as the busiest commercial port in California and the third busiest along the U.S.-Mexico border, Otay Mesa’s Land Port of Entry (POE) facilitates extensive cross-border trade.

Last year, California secured a $150 million grant from the U.S. Department of Transportation for the construction of the Otay Mesa East POE (Otay II), slated for completion in 2026. This new border crossing aims to bolster cross-border trade and reduce wait times to under 20 minutes, further enhancing the region’s economic vitality.

Otay Mesa benefits from convenient access to major markets, with key roadways such as the 905 freeway, 125-toll road, and state route 11 providing vital transportation arteries. Located just 18 miles from San Diego’s CBD, Otay Mesa also boasts proximity to major cities like Los Angeles, Phoenix, and Las Vegas.

In addition to road infrastructure, air transportation plays a significant role in the region’s connectivity. The Brown Field Municipal Airport, situated 1.5 miles north of the U.S.-Mexico border, serves the Otay Mesa area. Plans for the development of Metropolitan Airpark, a 331-acre project slated for completion over the next two decades, promise to further enhance aviation facilities and industrial infrastructure in the region. Moreover, the Tijuana International Airport, coupled with the Cross Border Xpress (CBX) pedestrian bridge, provides seamless connectivity between San Diego and Tijuana, reinforcing Otay Mesa’s strategic position as a vital economic corridor.

Supply & Demand Dynamics

Otay Mesa boasts a substantial industrial footprint, with over 23 million square feet of existing industrial space. The majority of this space, totaling 8 million square feet, falls within the 100,000 to 250,000 square feet range, while another 4.7 million square feet comprises facilities over 500,000 square feet in size. Since 2019, Otay Mesa’s industrial inventory has expanded by 45%, reflecting significant market growth.

Currently, average asking rents in Otay Mesa stand at $1.31 NNN per square foot per month or $15.72 NNN per square foot per year, marking a notable increase of over 75% since 2019. Despite this rise, Otay Mesa offers some of the most competitive industrial rental rates in the San Diego region. Vacancy rates have climbed from 2% at the end of 2022 to 5.8% by the end of Q3, primarily due to the completion of one million square feet of vacant speculative construction space within the past year.

With nearly 2 million square feet of construction activity currently underway, Otay Mesa leads the San Diego market in development. The largest project on the horizon is a 257,000-square-foot speculative warehouse slated for completion in Q2 2024. Notably, Otay Mesa is attracting significant attention from industrial investors and occupiers, driven by its strategic positioning for nearshoring, manufacturing, and warehouse/distribution growth. Enhanced port capacities, growing cross-border opportunities with Mexico, and a favorable economic landscape position Otay Mesa for continued expansion and prosperity in the years ahead.